Stock Trade

Peter Munk, a reputable Canadian businessperson, founded Barrick Gold Corporation in 1983. Currently, the multinational gold producer is headquartered in Toronto, Canada. From a meager start, the company has gradually but steadily grown to become a leading player in the gold mining industry, expanding its wings to incorporate oil and gas drilling into its portfolio in the last decade. Through its parent company and a host of other subsidiary companies, the firm has expanded its operations to various parts of the world including Africa, Australia Pacific Region, South America, and North America. Over the years, however, the company’s major product has been gold. Today, the company’s reputation is universally acclaimed, with a huge customer base all over the world. Under the capable leadership of Aaron Regent, the company’s Chief Executive Officer, the firm has posted impressive financial results for the last few years. Its portfolio has equally expanded to include 27 operating mines located in five continents, a host of advanced exploration projects, and unrivalled land positions in areas considered rich in gold and copper.

 

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The company’s official website, available at http://www.barrick.com, provides important information for both its stakeholders and investors. The company’s vision outlined on its website states that they desire, “To be the world’s best gold company by finding, acquiring, developing and producing quality reserves in a safe, profitable and socially responsible manner” (Barrick Gold Corporation). The company has continued to face stiff competition even in areas that have been long viewed as its traditional markets. Today, three companies contribute to the stiffest competition to the firm, threatening to cut off its earnings. These noteworthy competitors include AngloGold Ashanti Ltd, Rio Tinto Limited, and Newmont Mining Corp., all operating in the gold industry.

The company’s released third quarter results for 2012 has shown mixed signals in terms of the firm’s performance. However, overall, the results have shown an impressive growth prospect. In this quarter, the company posted net earnings of $0.62 billion as compared to $1.37 billion in the same period in 2011. This is a drop of 54.44%. An almost equally margin was posted in adjusted net earnings. The company’s operating cash flow also dropped significantly from $1.90 billion in the same period in 2011 to $1.73 billion in 2012. This represented a decline of 8.95%. The company also posted some positive results. Its newly acquired Pueblo Viejo mine situated in the Republic of Dominica started yielding. However, the mine is expected to be fully in operation by December 2012. Its expected output is 25,000-675,000 being a 60% share of the total output. Additionally, the company’s Pascua-Lama site moved closer to full operation. Notably, the company’s per share earnings dropped, too. In the third quarter of 2011, the firm reported per share earnings of $1.37. However, in the third quarter of 2012, the results dropped to $0.62. The drop in the company’s earnings and per share income can be attributed to several factors. First, there was a significant drop in gold prices. Whereas 2011 third quarter was favored by impressive gold prices, 2012 quarter witnessed a five percent drop in gold prices to settle at $1,655 per ounce. Secondly, the firm’s cash cost increased significantly from $1.83 per pound in 2011 to $2.33 per pound in the 2012 quarter. The 2011 cash cost was favored by lower production cost in Zaldivar mine, which is not the case in 2012. The region’s poor performance in 2012 quarter is attributed to labor strikes, which paralyzed its operations and shipments.

The company’s stock has shown responsiveness to changes in its earnings and market turbulences. Periods characterized by projected high income have shown high share prices. In May, for instance, when the Company’s new mine, Pueblo Viejo mine, brought in its first produce, the stock prices moved upwards. Generally, the company’s share prices have been on a steady decline from November 2011 after posting 51.87. December posted an average of 44.39, January, 48.32 and October of 2012 after a series of declines posted 40.27. Investors only invest their funds if they are certain they will make profits. Therefore, any market changes that threaten to negatively influence a firm’s profitability make them shy away. For this company, decline in gold prices and increased operational cost have been major upsets.