Barrick Gold Corporation's Future Looks Bleak

After a terrible 2013, it was widely believed that things could not get any worse for gold miners, in general, and Barrick Gold , in particular. Indeed, Barrick, Goldcorp , and Newmont Mining  together reported a total loss of $18 billion in 2013 as the price of gold collapsed, and the three companies were forced to write down the value of their mines.

So could things get any worse? First-quarter results are showing that, as of yet, miners may not be out of the woods yet.

Poor performance continues
Barrick's first quarter was terrible. The miner posted a 90% decline in first-quarter profit underscoring a tough operating environment.

The company's net earnings for the first quarter came in at $88 million, compared to $847 million during the first quarter of 2013. Adjusted earnings fell to $238 million from $923 million, and revenue slumped from $3.4 billion to $2.6 billion. Of course, a weak gold price is to blame for these declining profits, but the company's declining operations have also eaten away at profits.

For example, the company has sold $1 billion of assets since July of last year, and gold output for the quarter fell to 1,588,000 ounces, down from 1,797,000 reported during the same period last year. The volume of copper produced also fell nearly 30% year on year due to an equipment failure at Barrick's Lumwana mine in Africa.

On the bright side, Barrick's all-in sustaining cost of production per ounce, or AISC, for the quarter came in lower than expected at $833, almost 10% lower year on year and below initial guidance of $920 to $980 per ounce.

Specifically, Barrick's five most important mines, which will account for about 60% of production this year, reported AISC's of $672 per ounce for the first quarter. That said, the AISC of this mine is expected to rise throughout the rest of the year to between $750 and $800 per ounce.

Beating forecasts
Newmont Mining put in a relatively good performance for the quarter. Earnings came in at $0.22 per share, beating forecasts that called for earnings of $0.19 per share. The company's average cost of production fell to $751 an ounce, from $760 an ounce a year ago.

For the most part, these good results came as the miner's output from the Tanami mine in Australia jumped 40%, helping to push down costs. Despite this jump in production, gold produced across the company's operations only ticked up to 1.21 million ounces, up 3.4% over last year.

Unfortunately, within the quarterly results release, Newmont warned that delays in getting approvals for Indonesian exports will force the company to scale back production within the country, which could result in the company missing full-year 2014 production forecasts.

Goldcorp was one of the few miners to remain profitable throughout 2013, and overtook Barrick as the world's largest gold miner by market cap. Fortunately, this performance has continued into 2014, with the company reporting adjusted profit of $0.26 per share for the first quarter, beating consensus estimates of $0.14 per share.

Goldcorp plans to drive output higher by 50% during the next two years as it starts up new mines in Canada and Argentina, as well as lowering costs. Further, Goldcorp reported all-in sustaining costs were $840 an ounce for the quarter, compared with $1,134 a year earlier. Actually, these costs beat management's own targets of all-in sustaining costs of about $875 an ounce offered on April 9.

Foolish summary
All in all, it would appear that Barrick's problems, which started during 2013, are continuing into 2014. Newmont mining did perform well during the first quarter, but problems, outside of the company's control, within Indonesia, could prevent it from meeting output forecasts this year. Goldcorp, on the other hand, has started the year well and it looks as though 2014 could be another solid year for the company.

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The article Barrick Gold Corporation's Future Looks Bleak originally appeared on

Rupert Hargreaves has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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