Source: Streetwise Reports
June 8, 2023 (Investorideas.com Newswire) Despite centuries of incremental improvement, mining remains a dirty industry in many peoples minds. Barrick Gold Corporation (ABX:TSX; GOLD:NYSE) aims to change that perception.
The company operates mines and projects in 18 countries in North and South America, Africa, Papua New Guinea, and Saudi Arabia. Notable operations include Nevada Gold Mines, Bulyanhulu, Hemlo, Jabal Sayid, Kibali, Loulo-Gounkoto, Lumwana, North Mara, Porgera, Pueblo Viejo, Tongon, Veladero, and Zaldivar.
Barrick's Bulyanhulu operation is located in northwest Tanzania, approximately 55 km south of Lake Victoria and 150 km southwest of Mwanza. The Hemlo underground operation is located north of Lake Superior on the Trans-Canada Highway, approximately 35 km east of Marathon, Ontario.
The company's Jabal Sayid copper operation is located approximately 350 km northeast of Jeddah in the Kingdom of Saudi Arabia, while its Kibali gold mine project is located in the northeast of the Democratic Republic of Congo. The firm is truly a global operation, spanning many different jurisdictions with widely different restrictions on gold mining operations.
The Catalyst: Striving for Sustainability
With so many diverse operations underway in different regions, it's natural that Barrick is striving to standardize its work to improve both economic and environmental bottom lines.
Reporting on the results for the first quarter of 2023, the firm's president and chief executive officer, Mark Bristow, said, "We're also maintaining our carefully planned transition to cleaner energy. In Nevada, work has started on the TS Power Plant's natural gas co-fire project as well as the TS Solar project.
At Loulo, work is underway on the expansion of its solar plant and the addition of a battery storage system, and at Kibali in the Democratic Republic of Congo, a battery backup system for the three hydropower stations that supply the bulk of its energy is being planned."
These advances build upon the initiatives listed in the firm's 2022 Sustainability Report, which reported over US$36 million spent on community development projects and over 83% reuse or recycling of water across the firm's many mining projects.
One notable example of community support is the spice farm the firm developed near its Veladero mine in Argentina. In 2022, the mine helped those farmers automate their production, tripling the volume of cumin, chili, and other spices they produced, increasing income tenfold, and creating new economic opportunities for local people.
Why This Sector? Sustainability Matters
While mining is an important primary industry, it generally does little to enhance the operation of economic actors in the other strata of production. It can consume considerable resources, especially water, power, and petrochemicals, that could also be used to feed, clothe, and house members of the local community.
In recognition of this reality, Barrick operates community development committees (CDCs) at all its mines. Each CDC's role is to allocate a community investment budget to those projects and initiatives most needed and desired by local stakeholders. The community investment budgets are decided annually at each site, guided by the community's needs.
This setup operates on the belief that no one knows the needs of any community better than the community itself, and the CDC model is designed to put each community in the driver's seat for decision-making.
Every CDC is elected and made up of a mix of local leaders and community members, as well as representatives from local women's and youth groups and disadvantaged groups. Each CDC receives requests for projects from the community and meets to decide which will be supported and how these projects will scale, align with and contribute to regional development plans.
This type of community engagement is important to acquire what academic Luis Llaque terms a "social license to operate (SLTO)." As he explains in his doctoral thesis, "Failure to gain an SLTO in the mining industry often leads to mine closures and increased risk exposure that negatively impacts profitability. Mining project managers who do not obtain an SLTO risk project, which can affect profitability. "
Why This Company? Putting Sustainability First
Through its CDC program, Barrick is ensuring that it maintains its all-important SLTO regardless of the specific jurisdiction in which it is operating.
As a global company, taking a uniform approach to secure SLTOs makes sense — as is apparent from the firm's 40 years of success worldwide operation.
Why Now? Building on a Strong Track Record
In addition to its strong community footing and ongoing commitment to moving toward cleaner energy sources, Barrick offers considerable production numbers. The company is on track to achieve its 2023 guidance of 4.2 million to 4.6 million ounces of gold and 420 to 470 million pounds of copper, which has become a key strategic resource as the world roils in the precursor stages of another incipient global conflict.
Barrick is reporting that the construction of its Phase 7A Leach Pad is now complete, with Phase 7B construction expected to restart in Q4 2023 for completion in 2024.
As Global Analyst Adrian Day explained in a recent review, "The company reiterated that it was on track for full-year 2023 guidance, both for gold and copper production as well as costs, and expects a steady increase throughout the balance of the year with new processing plants at both Gold Quarry and Turquoise Ridge as well as the ramp up at Pueblo Viejo to full capacity by July."
This is in line with what Technical Analyst Clive Maund said about the stock in March: "Barrick is therefore believed to have just begun a new intermediate uptrend that could be sizeable, and with only modest gains so far, this looks like a good point to buy it. Needless to say, since this is one of the largest gold stocks, it is regarded as a good core holding for a Precious Metals portfolio, and it is worth noting that Barrick has significantly increased its copper resources over the past year."
Indeed, credit rating agency New Constructs reported in analyst notes updated on May 4 that Barrick Gold Corp. had earned a "Very Attractive" credit rating. Only 147 of the 659 companies in New Constructs' "Other Large Cap" credit rating group have achieved that rating, the highest that the analysis group offers.
Ownership and Share Structure
According to Reuters, 0.71% of Barrick Gold's stock is held by management and insiders. President and CEO Mark Bristow is the largest insider shareholder at 0.35%, with 6.22 million shares. Executive Chairman John Thornton has 0.16%, with 2.74 million, and CFO and Senior Executive Vice President Graham Shuttleworth has 0.04%, with 0.76 million.
62.82% is held by institutional investors. Van Eck Associates Corp. has the most at 4.38%, with 76.91 million shares. The Vanguard Group Inc. has 3.40%, with 59.74 million. Capital World Investors has 2.78%, with 48.80 million. First Eagle Investment Management has 2.41%, with 42.32 million. Fidelity Management & Research Corp. has 2.19%, with 38.52 million, and BlackRock Investment Management has 2.08%, with 36.56.
The rest is in retail.
Market Watch reports that Barrick Gold Corporation has a market cap of US$30.02 billion. The firm has a free float of 1.74 billion shares, with 1.76 billion total shares outstanding. It trades in the 52-week range between US$13.01 and US$21.17.
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