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Barrick Inks Deal With Saracen to Divest its Stake in KCGM

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Barrick Gold Corporation GOLD has landed a deal to divest its 50% interest in Kalgoorlie Consolidated Gold Mines (“KCGM”) to Saracen Mineral Holdings Limited for total cash consideration of $750 million. The transaction is slated to be closed in fourth-quarter 2019, subject to customary closing conditions.

The move highlights Barrick’s plan to realize more than $1.5 billion from the disposal of non-core assets by the end of 2020. Per the company, the Western Australia-based KCGM asset does not fit with its strategy of operating mines. Moreover, the divestment enables the company to focus on core operations.

Barrick’s shares have gained 26.6% in the past year compared with the industry’s 51.6% rally.

Barrick recorded net earnings of $2,277 million or $1.30 per share in third-quarter 2019 against net loss of $412 million or 35 cents in the year-ago quarter. Adjusted earnings per share came in at 15 cents, which beat the Zacks Consensus Estimate of 10 cents.

Revenues surged 46% year over year to $2,678 million in the quarter and surpassed the Zacks Consensus Estimate of $2,619.8 million.

For 2019, the company continues to anticipate attributable gold production in the range of 5.1-5.6 million ounces at AISC of $870-$920 per ounce. However, cost of sales is projected to increase in the range of $940-$990 per ounce, up from previous expectation of $910-$970 per ounce.

Barrick continues to expect copper production in the range of 375-430 million pounds at AISC of $2.40-$2.90 per pound and at cost of sales of $2.30-$2.70 per pound.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the basic materials space are Kirkland Lake Gold Ltd (KL - Free Report) , Franco-Nevada Corporation FNV and Agnico Eagle Mines Limited AEM, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kirkland Lake Gold has an expected earnings growth rate of 96.3% for the current year. The company’s shares have surged 146.5% in the past year.

Franco-Nevada has projected earnings growth rate of 46.2% for 2019. The company’s shares have rallied 46.8% in a year.

Agnico Eagle has an estimated earnings growth rate of 168.6% for the current year. Its shares have moved up 64.1% in the past year.

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