Will Barrick's Higher Costs Undercut Its Profit Momentum Ahead?

Barrick Mining Corporation’s B third-quarter profits jumped on higher gold prices, but higher unit costs remained a drag.  Its cash costs per ounce of gold and all-in-sustaining costs (AISC) — a critical cost metric for miners — increased around 3% and 2% year over year, respectively, in the third quarter, although declining from the previous quarter. AISC of $1,538 increased from the year-ago quarter due to higher total cash costs per ounce. 

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. Barrick’s consolidated gold production fell 12% year over year to 829,000 ounces in the third quarter. 

While Barrick is committed to cost discipline, its third-quarter results point to the need for tighter cost controls. 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 watch the next quarter closely as sustained high unit costs could weigh on margins and constrain future capital returns. 
  
Among its major peers, Agnico Eagle Mines Limited AEM is also exposed to higher production costs. In the third quarter, Agnico Eagle’s total cash costs per ounce for gold were $994, up 8% from $921 a year ago and from $933 in the prior quarter. AISC was $1,373 per ounce, marking a roughly 6% increase from the prior quarter and a 7% year-over-year rise. Agnico Eagle forecasts AISC per ounce between $1,250 and $1,300 for 2025, suggesting a year-over-year increase at the midpoint. 

Newmont Corporation NEM lowered its third-quarter AISC to $1,566 per ounce, marking a 3% decrease from the prior-year quarter and a decline from $1,593 in the prior quarter. This improvement was primarily due to a decrease in costs applicable to sales and lower general and administrative expenses, as Newmont is enjoying the benefits from its cost-saving actions. 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.

B’s Price Performance, Valuation & Estimates

Shares of Barrick have popped 158.4% year to date against the Zacks Mining – Gold industry’s rise of 134.1%, thanks to the gold price rally.

From a valuation standpoint, B is currently trading at a forward 12-month earnings multiple of 12.03, a roughly 7.5% discount when stacked up with the industry average of 13.01X. 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 77.8% and 51.9%, respectively. The EPS estimates for 2025 and 2026 have been trending higher over the past 60 days.

B stock currently carries a Zacks Rank #2 (Buy). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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