Barrick (GOLD) to Divest Royalty Portfolio to Maverix Metals
Barrick Gold Corporation GOLD recently agreed to sell a portfolio of royalties to Maverix Metals Inc. for total consideration of up to $60 million. The deal, which is subject to the satisfaction of customary closing conditions, is expected to close at the end of the third quarter of 2022.
The portfolio consists of 22 royalties on the production of minerals from mines in North America, South America, Australia and Africa.
Barrick noted that total consideration of $60 million for the transaction consists of $50 million in cash payable on closing of the divestment, subject to the exercise of any right of first refusal or buy-down right by the counterparties under certain royalties. It also includes three contingent payments.
The contingent payments include $6 million if the operator of the Eskay Creek project in British Columbia gets all permits needed to start the construction of the mine within six years of closing, and $2 million if Maverix secures cash payments from the portfolio, excluding the Eskay Creek royalty, equal to or more than $10 million within six years of the transaction closing. It also includes $2 million if Maverix gets cash payments from the portfolio, barring the Eskay Creek royalty, equal to or more than $20 million within six years of deal closing.
Barrick’s shares are down 26.6% over a year, compared with a 19.8% decline recorded by its industry.
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The company witnessed strong performance across the portfolio during the second quarter of 2022. It, however, faced challenges from higher costs and lower copper prices in the quarter, offset by higher gold realized prices. Barrick saw higher gold cost of sales in the quarter, hurt by increased input prices due to supply chain issues and the Russian-Ukraine conflict.
The company’s gold production for the second quarter was 1.04 million ounces, higher sequentially, driven by stronger performance across Carlin, Turquoise Ridge, Veladero, Bulyanhulu and North Mara.
For 2022, Barrick continues to anticipate attributable gold production in the range of 4.2-4.6 million ounces. It expects the fourth quarter to see the strongest production, driven by Cortez, higher grades from Phoenix and Tongon, as well as better underground productivity at Hemlo.
Barrick Gold Corporation Price and Consensus
Barrick Gold Corporation price-consensus-chart | Barrick Gold Corporation Quote
Zacks Rank & Key Picks
Barrick currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks worth considering in the basic materials space include Daqo New Energy Corp. DQ, Albemarle Corporation ALB and Sociedad Quimica y Minera de Chile S.A. SQM.
Daqo New Energy, currently carrying a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 177.5% for the current year. The Zacks Consensus Estimate for DQ's earnings for the current fiscal has been revised 20.8% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Daqo New Energy’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, the average being 10.8%. DQ has gained around 4% over a year.
Albemarle has a projected earnings growth rate of 425.7% for the current year. The consensus estimate for ALB's current-year earnings has been revised 67.9% upward in the past 60 days.
Albemarle’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 24.2%, on average. ALB has gained around 8% in a year and currently carries a Zacks Rank #1.
Sociedad has a projected earnings growth rate of 520.5% for the current year. The Zacks Consensus Estimate for SQM’s current-year earnings has been revised 34% upward in the past 60 days.
Sociedad’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, the average being 28.2%. SQM has rallied roughly 88% in a year. The company carries a Zacks Rank #2 (Buy).
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