(Bloomberg) — Most of the world’s top gold miners have seen their stocks rise this year as precious metal prices repeatedly hit record highs. Not Barrick Gold Corp.
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Missed production targets, higher operating costs and political turbulence at mines in Africa and Asia are making investors increasingly sour on the world’s second-largest gold producer. On Thursday, Barrick announced that gold production exceeded analyst expectations for the eleventh consecutive quarter.
Barrick is one of many miners who have struggled to capitalize on the bullion boom amid higher mining costs and weaker production. But of the largest precious metals producers – Newmont Corp., Agnico Eagle Mines Ltd. and AngloGold Ashanti Ltd. – Barrick has consistently underperformed, with shares remaining virtually unchanged since early January. Gold has now risen by 30% in this period.
Explanation from Chief Executive Officer Mark Bristow: “We are rebuilding the company.”
Barrick has worked for years to improve its balance sheet after accumulating debt through acquisitions. Bristow, who took over as CEO in 2019 as part of the acquisition of Randgold Resources Ltd. by the Canadian company, has paid off that debt while exercising restraint in making deals. He has also pursued diversification into copper.
Bristow’s explanation does not seem to convince investors. Some of Barrick’s top investors have sold shares while increasing their stakes in competitors. Blackrock Inc., one of Barrick’s largest shareholders, cut its stake in its purchases of Agnico Eagle and Newmont, according to regulatory disclosures in November. Other major investors such as Van Eck Associates Corp., First Eagle Investment Management LLC and Capital Group Inc. have also reduced their positions in recent months.
Barrick isn’t the only one facing criticism from shareholders whose expectations have been raised by gold’s rally. Bigger rival Newmont last month suffered its biggest one-day stock drop since 1997 after disappointing quarterly results.
Bristow said investors are undervaluing Barrick’s stock. “Our job as managers is to make sure the market understands us,” he said in an interview.
Barrick’s strengths lie in its complex of productive mines in the US, along with its vast operations in Papua New Guinea and Mali. It has diversified through the expansion of the copper market just as the global energy transition increases demand for wiring metal. The company has relatively little debt.
