Barrick Gold Earnings: Solid, Driven by Increased Gold Sales Volumes and Prices

We retain our fair value estimate of USD 21 per share for no-moat Barrick Gold after its 2023 third-quarter result met our expectations. Adjusted EBITDA of USD 1.46 billion rose 27% on the third quarter of 2022, driven by higher gold prices and sales volumes, partially offset by increased unit cash costs. The balance sheet remains strong, with minimal net debt of about USD 510 million. It will pay a USD 0.10 (CAD 0.137) per share dividend in December, half that paid last year but in line with its dividend policy. We forecast total 2023 dividends of USD 0.40 (CAD 0.548) for a 2.5% forward yield at current share prices. Barrick targets a quarterly base dividend of USD 0.10 per share, with additional dividends potentially payable if it has net cash on the balance sheet. We think this is a reasonable approach. Though as its shares trade at around a 24% discount to fair value, we think share repurchases would be a better use of surplus funds. We think the discount to fair value is likely due to concerns over rising real interest rates, which are a headwind to gold prices.