Barrick Gold Corporation (TSX: ABX) reported third-quarter earnings for 2024 that fell short of market expectations, posting adjusted earnings per share of $0.30, an improvement from $0.24 in the same quarter last year but missing analysts’ expectations by a cent. This slight shortfall follows a second-quarter EPS of $0.32, indicating a sequential decline that underscores the struggle to contain expenses even as revenue benefits from elevated metal prices.
The miner’s quarterly revenue totaled $3.37 billion, which, while up 18% from $2.86 billion in the third quarter of 2023, also failed to meet Wall Street’s forecast of $3.46 billion. Although Barrick’s revenue benefited from higher gold prices—averaging $2,494 per ounce in the quarter compared to $1,928 per ounce a year ago—the company’s production costs have outpaced revenue growth, putting pressure on its bottom line.
The higher realized price was only partially effective in offsetting a 9% year-over-year decrease in gold production, which fell to 943,000 ounces this quarter from 1.04 million ounces in Q3 2023. This production decline, combined with rising costs, contributed to an overall sense of restrained profitability in Barrick’s core gold mining operations.
In Q3 2024, the cost of sales for gold reached $1,472 per ounce, a 15% increase from $1,277 in the same quarter last year, and a modest rise from $1,441 per ounce in Q2 2024. Total cash costs for gold were up 21% year-over-year, reaching $1,104 per ounce compared to $912 per ounce in Q3 2023.
This inflation in cash costs, compounded by a 20% increase in all-in sustaining costs, which rose to $1,507 per ounce, reflects substantial cost headwinds. Rising labor costs, energy expenses, and increased prices for consumable materials have all contributed to a less favorable cost environment.
For copper, Barrick also experienced similar pressures: the cost of sales per pound of copper increased to $3.23, up 21% from $2.68 a year earlier, with total cash costs and AISC rising to $2.49 and $3.57 per pound, respectively, marking a 21% and 11% increase year-over-year. These heightened production costs indicate challenges amid an inflationary environment, even as it benefits from higher market prices for copper, which averaged $4.27 per pound in Q3 2024 compared to $3.78 in the same quarter last year.
In terms of cash flow, Barrick reported operating cash flow of $1.18 billion, a slight improvement from $1.16 billion in Q2 2024 and up 5% from $1.13 billion in Q3 2023. Free cash flow for the quarter was $444 million, a robust 31% increase from Q2 2024’s $340 million, reflecting both increased cash generation and tighter capital spending.
The company reduced its net debt by 27% from the previous quarter, bringing it down to $500 million, a potential reflection of the increased liquidity needs and efforts to maintain financial flexibility in a high-cost environment.
Barrick maintained its quarterly dividend at $0.10 per share, in line with its stated dividend policy, and the dividend is set to be paid on December 16, 2024, to shareholders on record as of November 29. Barrick also repurchased 4.725 million shares in Q3 as part of its $1 billion buyback program, bringing the year-to-date repurchases to 7.675 million shares.
Barrick has been advancing several key projects, including the Pueblo Viejo expansion, higher throughput at Nevada Gold Mines, and better grades at the Kibali mine. Despite the Q3 performance, Barrick remains confident in achieving its full-year production guidance, with a “materially improved” Q4 anticipated.
CEO Mark Bristow also noted Barrick’s commitment to reserve replacement, stating that projects like the Reko Diq copper-gold project in Pakistan and the Lumwana Super Pit in Zambia are progressing on schedule, with feasibility studies expected to be completed by year-end.
“The Fourmile project in Nevada continues to show exciting value potential, and significant new satellite orebody opportunities have been highlighted at Loulo and Kibali,” he added.
Barrick Gold last traded at $25.72 on the TSX.
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