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Barrick to Focus on Tier One Assets, Divests Stake in Morila

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Barrick Gold Corporation (GOLD - Free Report) and AngloGold Ashanti Limited have agreed to divest their 80% interest in the Mali-based Morila gold mine to Mali Lithium Limited. Notably, the remaining 20% interest of Morila is held by the state of Mali.

The cash consideration for the deal is estimated at $22-$27 million, based on closing adjustments. Further, the sale of stake is subject to certain conditions that includes acknowledgement of the transaction by the state of Mali. The companies are expecting the deal to close before the end of October 2020.

Per Barrick, the move will enable it to focus on its strategy of discovering, owning, developing and operating Tier One assets (a mine that produce more than 500,000 ounces of gold per year and has a mine-life of minimum 10 years).

Morila poured its first gold in October 2000. The discovery and development of the mine paved way for Barrick’s legacy company Randgold Resources’ growth into one of the leading gold miners across the globe. The mine produced 6.9 million ounces of gold and paid more than $2.5 billion to its stakeholders in the form of dividends and taxes. It has also served as the base for Randgold’s expansion of footprint into Africa. In 2015, the mine transitioned to a stockpile and tailings treatment facility and was forecasted to close in 2021.

Barrick’s shares have surged 51% in the past year compared with the industry’s 42.2% rally.

For 2020, Barrick continues to anticipate attributable gold production in the range of 4.6-5 million ounces. All-in sustaining cost is expected in the range of $920-$970 per ounce, unchanged from the prior view. Cost of sales is expected in the range of $980-$1,030 per ounce, unchanged from the previous guidance.

Zacks Rank & Other Key Picks

Barrick currently sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the basic materials space include Kinross Gold Corporation (KGC - Free Report) , Eldorado Gold Corporation (EGO - Free Report) and Yamana Gold Inc. (AUY - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross has an expected earnings growth rate of 100% for 2020. The company’s shares have surged 76.7% in the past year.

Eldorado Gold has an expected earnings growth rate of 2,325% for 2020. Its shares have returned 20.5% in the past year.

Yamana has an expected earnings growth rate of 76.9% for 2020. The company’s shares have soared 68.6% in the past year.

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