Barrick Earnings: Strong but Overshadowed by the Resolution of Its Dispute With Newmont

Key Morningstar Metrics for Barrick Mining

• Fair Value Estimate
  : C$41.00
• Morningstar Rating
  : ★★
• Morningstar Economic Moat Rating
  : None
• Morningstar Uncertainty Rating
  : High

What We Thought of Barrick Mining’s Earnings

Barrick Mining’s ABX second-quarter adjusted NPAT is up 70% from a year ago to USD 1.4 billion or USD 0.82 per share. The stronger gold price and slightly higher sales volumes more than offset increased unit costs. But shares fell 6% as it also settled its dispute with Newmont over Nevada Gold Mines.

Why it matters: Newmont alleged Barrick had mismanaged their Nevada joint venture. While we aren’t privy to the details, the dispute may have helped Newmont to reduce the price to buy a share of Barrick’s attractive Fourmile deposit, which is now included in NGM.

• The share price decline—in contrast to the 4% rise in no-moat Newmont shares—is likely due to the market ascribing blue sky to Fourmile, given the very positive sentiment in gold and impressive high-grade resource found so far.
• Barrick is on track. First-half sales volumes and unit costs broadly align with our unchanged full-year estimates. Volumes are likely rising in the second half. Guidance is reiterated except for reduced capital expenditure on its Reko Diq project in Pakistan as it reviews the development.

The bottom line: Spot gold is materially above long-term consensus of about USD 3,600, let alone our lower estimate for midcycle cost support at about USD 2,050. This difference likely drives the 40% premium at which shares trade to our unchanged USD 29 fair value for no-moat Barrick.

• Fourmile is potentially a large, low-cost, long-life mine that would likely be very profitable at the current gold price of about USD 4,400 per ounce. However, a prefeasibility study is still being worked on—due in 2029—with first production likely in 2030 at the earliest.
• We assume it will be developed given exploration results to date.

Coming up: Barrick’s intention to demerge and spin off its stakes in NGM and Pueblo Viejo likely gave Newmont leverage. With Newmont now consenting to the IPO, North American Barrick will likely list by the end of 2026. We expect Barrick to sell a 10% to 15% stake in it at the IPO.