Barrick Gold Corporation (USA), NYSE:ABX remains undervalued and could trade as high as $100 in 2012 according to Shayne Heffernan of HCM.

Barrick Gold Corp. stated at the end of August that for fiscal 2011, it expects production levels of 7.6-8 million ounces of gold. Total cash costs are anticipated to be $450-$480 per ounce, or a net cash cost of $340-$380 per ounce.

Gold prices have jumped roughly 40 percent in the past 12 months alone, and are trading now at roughly $1,780 per ounce, giving Barrick Gold a possible record breaking 2011 in profit terms.

The CEO has stated Barrick has no plans to hedge its gold production as the price of the precious metal keeps climbing and he said that a collapse of the Euro currency would lift the gold price higher.

Barrick is the world's largest gold producer, with a portfolio of 26 operating mines, advanced exploration and development projects located across five continents, and large land positions on the most prolific and prospective mineral trends. The Company also has the largest reserves in the industry, with about 140 million ounces of proven and probable gold reserves, 6.5 billion pounds of copper reserves and 1.07 billion ounces of silver contained within gold reserves1 as of December 31, 2010.

In 2010, Barrick produced 7.8 million ounces of gold at total cash costs of $457 per ounce2 or net cash costs of $341 per ounce3. In addition, the Company produced 368 million pounds of copper at total cash costs of $1.11 per pound2. For 2011, Barrick expects gold production of 7.6-8.0 million ounces and copper production of approximately 300 million pounds. Total cash costs are expected to be $450-480 per ounce2 of gold or net cash costs of $340-$380 per ounce3 and $1.35-$1.45 per pound2 of copper.

The Company is targeting growth in annual gold production to 9.0 million ounces4 within five years, which includes production from the newly expanded Cortez mine, two advanced development projects5, the Pueblo Viejo and Pascua-Lama projects, as well as additional opportunities around existing operations.

2010 Production

2009

2010 Gold Reserves

2009

Reserves are the cornerstone of Barrick's business and, whether by exploration or acquisition, reserve replacement is a critical component of sustainable success. Much of Barrick's success can be attributed to its practice of consistent investment in exploration and in acquisitions of properties with early stage potential, allowing the Company to continue its excellent track record of consistently replacing reserves.

Even during the years of low gold prices, when most of the industry retrenched, Barrick maintained its commitment to exploration and discovered Lagunas Norte, one of the few major discoveries of the 1990s. Barrick has now amassed an extensive portfolio of operating mines and exploration properties in what the Company believes to be some of the best and most prospective regions in the world. Much of that exploration potential lies near existing infrastructure, where the likelihood of reserve replacement is enhanced and the cost of proving up ounces is reduced.

Barrick believes there is excellent potential to make discoveries to expand reserves and resources at its existing mines. The Company's 2011 exploration budget has been increased to $370-$390 million and is weighted towards near term resource additions and conversion at its existing mines while still providing support for earlier stage exploration in its operating districts.

Barrick has made two significant gold discoveries on the Company's 100%-owned Cortez property in Nevada. These two discoveries, known as Red Hill and
Goldrush, are located on highly prospective ground, six kilometers southeast of the Cortez Hills mine and 24 kilometers southeast of the Pipeline mine. Based on the results of wide spaced drilling, the Company has outlined two zones of gold mineralization along a seven kilometer long trend.

The mineralization is primarily hosted in a favorable carbonate unit and has a tabular geometry. The new discoveries are geologically similar in style to Barrick's Cortez Hills and Goldstrike mines. The majority of the mineralization intersected to date is refractory and occurs at depths between 150 and 500 meters.

Barrick initially carried out a drill program at Red Hill to test for deeper sulfide mineralization below an area of shallow oxide mineralization. The drill program was successful in identifying favorable carbonate stratigraphy. An inferred resource of 3.5 million ounces of gold from 28,756,602 tons grading 0.123 ounces per ton gold(2) has been defined at Red Hill and mineralization remains open in all directions. An in-fill and extension drill program is underway at Red Hill to upgrade and expand the resource.

Institutional Holders

% Shares Owned:72.26%
# of Holders:916
Total Shares Held:722,177,028
3 Mo. Net Change: -12,251,267
# New Positions:86
# Closed Positions:98
# Increased Positions:395
# Reduced Positions:361
# Net Buyers:34

Growth for Barrick Gold Corp

1 Year3 Years5 Years
Sales %34.2722.0136.00
EPS %165.3338.4333.92
Dividend %10.0013.6214.87

Valuation Ratios

CompanyIndustrySectorS&P 500
P/E Ratio (TTM)13.9725.8917.7716.05
P/E High - Last 5 Yrs.36.48110.15231.16103.16
P/E Low - Last 5 Yrs.16.8256.7129.6212.78
Beta0.380.881.271.20
Price to Sales (TTM)4.3922.072.062.18
Price to Book (MRQ)2.483.071.663.14
Price to Tangible Book (MRQ)4.673.351.834.99
Price to Cash Flow (TTM)10.4714.2214.9910.61
Price to Free Cash Flow (TTM)-69.0448.3341.24
% Owned Institutions----

Dividends

CompanyIndustrySectorS&P 500
Dividend Yield0.901.341.412.16
Dividend Yield - 5 Year Avg.0.871.431.482.37
Dividend 5 Year Growth Rate14.87-3.7015.17-1.40
Payout Ratio(TTM)12.4620.5417.3932.30

Growth Rates

CompanyIndustrySectorS&P 500
Sales (MRQ) vs Qtr. 1 Yr. Ago30.7139.1516.4012.93
Sales (TTM) vs TTM 1 Yr. Ago27.5039.3018.4710.74
Sales - 5 Yr. Growth Rate36.0023.4513.747.89
EPS (MRQ) vs Qtr. 1 Yr. Ago40.2659.8818.2212.43
EPS (TTM) vs TTM 1 Yr. Ago188.95---
EPS - 5 Yr. Growth Rate33.928.4721.746.80
Capital Spending - 5 Yr. Growth Rate24.6622.3417.683.99

Financial Strength

CompanyIndustrySectorS&P 500
Quick Ratio (MRQ)1.511.740.730.76
Current Ratio (MRQ)2.243.071.131.12
LT Debt to Equity (MRQ)61.3118.9311.57110.87
Total Debt to Equity (MRQ)61.9121.1729.95149.02
Interest Coverage (TTM)-21.186.090.1323.27

Profitability Ratios

CompanyIndustrySectorS&P 500
Gross Margin (TTM)59.1235.0027.7135.09
Gross Margin - 5 Yr. Avg.54.5329.0026.4133.77
EBITD Margin (TTM)57.51---
EBITD - 5 Yr. Avg22.6610.3019.7620.97
Operating Margin (TTM)47.41-86.5415.23-
Operating Margin - 5 Yr. Avg.12.93-2.1914.5115.72
Pre-Tax Margin (TTM)47.30-62.4115.5115.68
Pre-Tax Margin - 5 Yr. Avg.14.260.9814.3615.26
Net Profit Margin (TTM)31.90-68.1911.4411.82
Net Profit Margin - 5 Yr. Avg.5.72-4.7810.3911.32
Effective Tax Rate (TTM)32.55-12.1923.6122.40
Effecitve Tax Rate - 5 Yr. Avg.59.9024.3728.1825.06

Efficiency

CompanyIndustrySectorS&P 500
Revenue/Employee (TTM)-2,353,4891,147,208,313780,980
Net Income/Employee (TTM)-358,098124,568,749105,528
Receivable Turnover (TTM)34.8117.815.249.57
Inventory Turnover (TTM)2.624.534.768.44
Asset Turnover (TTM)0.320.490.980.63

Management Effectiveness

CompanyIndustrySectorS&P 500
Return on Assets (TTM)10.268.6810.087.30
Return on Assets - 5 Yr. Avg.1.914.8111.086.44
Return on Investment (TTM)11.5210.6715.699.54
Return on Investment - 5 Yr. Avg.2.095.2616.288.53
Return on Equity (TTM)20.1714.9215.5625.03
Return on Equity - 5 Yr. Avg.2.704.2919.8421.16

 

Shayne Heffernan

Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.

Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services. www.livetradingnews.com