Is Barrick Mining's Slumping Gold Output a Red Flag Amid Rising Costs?

Barrick Mining (B) reported a 19% year-over-year drop in Q1 gold production to 758,000 ounces, driven by the suspension of Loulo-Gounkoto operations and lower output from Carlin and Cortez, contributing to a 20% rise in all-in-sustaining costs. The company's 2025 gold production forecast of 3.15-3.5 million ounces is down from 3.91 million ounces in 2024, excluding Loulo-Gounkoto, signaling a potential decline despite increased output from other mines. While Barrick's shares have increased 31.1% YTD, they are underperforming the Zacks Mining – Gold industry's 46.7% rise, and the company trades at a forward 12-month earnings multiple of 10.8, a discount to the industry average.

Analysis

Barrick Mining Corporation (B) reported a substantial decline in first-quarter 2025 gold production, which fell 19% year-over-year and 30% quarter-over-quarter to 758,000 ounces, its weakest quarterly output in recent years. This significant downturn was primarily attributed to the suspension of operations at the Loulo-Gounkoto mine stemming from a dispute with the Malian government over economic benefits, coupled with lower production from its Carlin and Cortez operations. The reduced output directly contributed to a 20% year-over-year surge in all-in-sustaining costs (AISC). Barrick's guidance for 2025 projects attributable gold production between 3.15-3.5 million ounces (excluding Loulo-Gounkoto), a decrease from the 3.91 million ounces produced in 2024, signaling ongoing production headwinds unless the Malian operations resume. While higher output from Pueblo Viejo, Turquoise Ridge, Porgera, and Kibali is anticipated, this is expected to be counteracted by reduced production at Veladero and Phoenix. Comparatively, peers Newmont Corporation (NEM) saw an 8% YoY Q1 production drop and Agnico Eagle Mines (AEM) a modest 0.5% YoY decline, with both appearing to have more stable 2025 outlooks. Despite a rally in gold prices, Barrick's shares have gained 31.1% year-to-date, underperforming the Zacks Mining – Gold industry's 46.7% ascent. Nevertheless, Barrick trades at a forward 12-month earnings multiple of 10.8x, representing an approximate 21% discount to the industry average of 13.66x, and it carries a Zacks Value Score of A. Furthermore, Zacks Consensus Estimates for Barrick's 2025 and 2026 earnings indicate robust year-over-year growth of 34.1% and 26.6% respectively, with EPS estimates having trended higher over the past 60 days, suggesting market anticipation of a future recovery or that current challenges are somewhat priced in.

Key Decisions for Investors

• Investors should closely monitor developments regarding the Loulo-Gounkoto mine suspension and any subsequent revisions to production guidance, as a resolution is pivotal for Barrick's output recovery.
• Carefully evaluate if Barrick's current valuation discount of approximately 21% to its industry peers adequately compensates for the heightened operational risks, increased costs, and reduced near-term production profile.
• Consider the contrast between the challenging Q1 operational performance and lower 2025 production outlook against the strong forward earnings growth estimates provided by Zacks, assessing the probability of a significant operational turnaround.
• Scrutinize upcoming financial reports for tangible improvements in all-in-sustaining costs and clear evidence of operational stabilization across key assets, beyond the Loulo-Gounkoto specific issues.
• Assess the strategic measures Barrick intends to implement to address its current geopolitical and operational challenges, which are crucial for bridging its stock performance gap relative to the broader gold mining industry and prevailing gold prices.