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Barrick (GOLD) Inks Deal With PNG Government to Reopen Porgera

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Barrick Gold Corporation (GOLD - Free Report) recently announced that Barrick Niugini Limited (“BNL”) and the Papua New Guinea (“PNG”) government agreed on a partnership for the Porgera gold mine’s future ownership and operation. The gold mine is set to resume operations in late 2021. It has been on care and maintenance since April 2020 when the government refused to renew its special mining lease.

Per the terms of the agreement, ownership of Porgera will be held in a new joint venture owned 51% by PNG stakeholders and 49% by BNL. Notably, BNL will remain the operator of the mine.

PNG stakeholders and BNL will share the economic benefits generated over the life of the mine on a 53/47 basis. The capital required to restart the mine will be financed by BNL. Also, a group of landowners who are the customary owners of the land where Porgera is located were allocated an increase in equity.

The state will retain the right to acquire the balance 49% of the mine from BNL at fair market value after 10 years.

James Marape, prime minister of PNG, noted that the framework agreement was finalized after months of negotiation and will benefit the country as well as set the precedent for future projects.

Shares of Barrick have declined 13% in the past year against 4.6% rise of the industry.

Barrick, in its last earnings call, noted that for 2021, it anticipates attributable gold production in the range of 4.4-4.7 million ounces. All-in sustaining costs (AISC) are expected in the range of $970-$1,020 per ounce and cost of sales is projected in the range of $1,020-$1,070 per ounce.

The company also expects copper production in the range of 410-460 million pounds at AISC of $2.00-$2.20 per pound and cost of sales of $1.90-$2.10 per pound.

 

Zacks Rank & Key Picks

Barrick currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Fortescue Metals Group Limited (FSUGY - Free Report) , Nucor Corporation (NUE - Free Report) and Impala Platinum Holdings Limited (IMPUY - Free Report) .

Fortescue has a projected earnings growth rate of 107.8% for the current fiscal. The company’s shares have surged 125.1% in a year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank  stocks here.

Nucor has an expected earnings growth rate of 135.3% for the current fiscal. The company’s shares have gained 107% in the past year. It currently sports a Zacks Rank #1.

Impala has an expected earnings growth rate of 197.6% for the current fiscal. The company’s shares have rallied 236% in the past year. It currently flaunts a Zacks Rank #1.

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