Jamaica is sitting on a gold treasure. This is supported by the findings of Geophysx Jamaica. The company has been searching for mineral resources on the Caribbean island for six years. After the exploration experts made a find, Geophysx teamed up with Barrick Gold. A joint venture will operate mining operations on a total of 4,000 square kilometres. Provided predefined operational milestones are reached and Barrick meets certain payment obligations, the mining giant will receive a share of up to 80% of the new mining sites. The Canadians are confident of success. They compare the geological conditions in Jamaica with those in the Dominican Republic.
On the much larger island to the east, Barrick Gold holds a 60% stake in the Pueblo Viejo mine. In 2023, a total of 559,000 ounces of gold were mined there from two open pits. The industry giant wants more and is expanding "Pueblo Viejo". The aim is to increase the annual mining volume to more than 800,000 gold ounces. The largest operating site of the group, which is active on 4 continents in 18 countries, is in the USA. Barrick owns 61.5% of Nevada Gold Mines. The company produced more than 3 million ounces there last year in open-cast and underground mines. The capacities of this, the world's largest gold mine in individual terms, are also to be increased. The overarching goal is clear: by the end of the decade, Barrick Gold wants to increase total production - which includes copper as well as gold - by 30% relative to 2023. "Our focus on exploration has put Barrick in a unique position to more than replace the reserves we mine year after year," explained CEO Mark Bristow recently. In fact, the Group's total proven and probable reserves have increased moderately since 2019 to 105 million ounces of gold equivalent recently, despite mining an average of more than 5 million ounces per year during this time.
In 2023, Barrick's gold and copper production shrank slightly compared to the previous period. At the same time, the company had to contend with rising costs. All-in sustaining costs (AISC) of USD 1,335 were incurred per ounce of gold. Compared to 2022, this key figure, which is highly regarded in the sector, has therefore risen by a good 9%. The rising gold price was not enough to offset cost inflation. On average, Barrick generated USD 1,986 per troy ounce sold, "only" 3% more than in the previous year. Consequently, operating profit (Ebidta level) stagnated at just over USD 1 bn in 2023. In the first quarter of 2024, the record hunt for precious metals increasingly played into the company's hands. At USD 2,075, the average realized price for an ounce of gold was 9.1% higher than at the start of 2023. AISC rose by 7.6%. Thanks to this discrepancy, the North Americans were able to increase their operating result by 6.6% to USD 907 million.
CEO Mark Bristow maintained the forecast for 2024. Among other things, the manager, who has been at the helm of the Group for five years, expects to produce up to 4.3 million ounces of gold. Bristow estimates the AISC at a range of USD 1,320 to USD 1,420 per gold ounce. Investments of between USD 2.5 and USD 2.9 billion are planned for the maintenance and expansion of gold and copper production. By way of comparison, capital expenditure in 2023 amounted to USD 2.36 bn. Neither the rising gold price nor better-than-expected quarterly figures were able to change the technical chart constellation of the Barrick share. The mining stock has been in an overarching sideways trend since mid-2022. With a new soft-callable Barrier Reverse Convertible (BRC), investors can bet that Barrick will continue to tread water. This new issue pays a coupon of 8.00% p.a. in the product currency CHF. The allocation in USD results in the quarterly distribution rising to 12.00% p.a. Irrespective of the BRC currency, the barrier is 69% of the initial fixing. This means that the underlying would have to fall to less than USD 12 in New York trading in order to jeopardize the full repayment of the nominal. Barrick has not traded below this level for five years. Leonteq is the issuer of the new BRCs. Please note the soft callable feature. It enables early termination and redemption of the product presented.
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