Barrick Mining's Higher AISC a Drag: Time to Tighten Cost Discipline?

Barrick Mining Corporation B saw its profits jump in the second quarter on higher gold prices, but it remains mired in headwinds from higher unit costs. Its cash costs per ounce of gold and all-in-sustaining costs (AISC) — a critical cost metric for miners — increased around 17% and 12% year over year, respectively, in the second quarter. AISC of $1,684 increased from the year-ago quarter due to higher total cash costs per ounce, although declining 5% from the previous quarter. Lower year-over-year production, partly due to the suspension of operations at the Loulo-Gounkoto mine, also contributed to the rise in its unit costs. 

While Barrick remains committed to cost discipline, second-quarter results signal the need for more aggressive cost-containment strategies to maintain competitiveness. For 2025, Barrick continues to see total cash costs per ounce of $1,050-$1,130 and AISC in the range of $1,460-$1,560 per ounce. These projections suggest a year-over-year increase at the midpoint of the respective ranges. Higher labor and energy costs may lead to increased costs. Investors should closely monitor Barrick’s next quarter as persistently elevated unit costs could erode margins and pressure future capital returns. 
  
Among its major peers, Newmont Corporation NEM saw around 2% year-over-year increase in AISC in the second quarter. Newmont expects gold AISC for the total portfolio to be $1,630 per ounce in 2025, reflecting a rise from $1,516 per ounce in 2024. Newmont expects AISC from its core portfolio to be modestly higher than the full-year guidance in the third quarter due to an uptick in sustaining capital spending. 

Agnico Eagle Mines Limited’s AEM AISC rose 10% year over year in the second quarter due to higher total cash costs and an uptick in sustaining capital expenditures and general and administrative expenses. Agnico Eagle’s total cash costs per ounce increased 7% year over year. Agnico Eagle forecasts AISC per ounce between $1,250 and $1,300 for 2025, suggesting a year-over-year increase at the midpoint.

B’s Price Performance, Valuation & Estimates

Shares of Barrick have popped 51.6% year to date against the Zacks Mining – Gold industry’s rise of 72.2%, thanks to the gold price rally.

From a valuation standpoint, B is currently trading at a forward 12-month earnings multiple of 10.43, a roughly 22.3% discount when stacked up with the industry average of 13.42X. It carries a Value Score of A.

The Zacks Consensus Estimate for B’s 2025 and 2026 earnings implies a year-over-year uptick of 55.6% and 24.1%, respectively. The EPS estimates for 2025 and 2026 have been trending higher over the past 60 days.

B stock currently carries a Zacks Rank #1 (Strong Buy). 

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This article originally published on Zacks Investment Research (zacks.com).

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