Barrick Stock Drops 5% as Earnings Miss Estimates Amid Higher Costs
Barrick Mining Corporation's stock price dropped around 5% in pre-market trading on Monday after the company released its second-quarter earnings results. Adjusted earnings per share came in at $0.82, below the $0.88 consensus estimate from LSEG. The miss was due to increased production expenses and retrospective tax penalties in Mali, which outweighed higher gold production.
The revenue for the quarter was $5.29 billion, beating the FactSet estimate of $5.17 billion by 2.3%. However, the net earnings declined 25% from the first quarter as gold prices eased and costs increased. The company reported a net income of $1.20 billion, up 50% yearly.
Barrick also announced a major settlement with Newmont Corporation, which will pay Barrick $1.95 billion under a joint-venture agreement in Nevada. As part of the deal, Newmont has agreed to support Barrick's planned North American listing and contribute Fourmile to Nevada Gold Mines. The Fourmile project is expected to produce up to 750,000 ounces of gold annually.
The market reaction was initially harsher than the settlement amount, with a $2.18 drop in share price suggesting a loss of about $3.66 billion in equity value. Analysts had previously recommended Barrick shares, with an average 12-month target price of $54.22. However, ongoing risks include gold prices and potential additional charges from Mali.