It is a tough year for Barrick Gold (GOLD 2.09%). The stock has lost almost 50% of its value as gold prices show no signs of rebound. Barrick's huge Pascua-Lama project was delayed, leading to $5.1 billion of impairments. Investors have also taken note of the $14.4 billion of debt on the balance sheet. As a result, Barrick's stock underperformed peers Goldcorp (GG) and Newmont Mining (NEM 13.13%). However, it's not all bad news for Barrick. I would like to highlight the strong points of the company, which, in my opinion, make it worth adding to your portfolio.

Low-cost producer
Barrick recently lowered its cost guidance for 2013. The company now expects that all-in sustaining costs for the full year will be in the $900-$975 per ounce range. This is a big improvement from the previous $1,000-$1,100 per ounce guidance.

In comparison, Goldcorp expects costs of $1,000-$1,100 per ounce, while Newmont Mining expects all-in sustaining costs of $1,100-$1,200 per ounce. As we can see, Barrick would produce cheaper gold than its peers even if the company finishes the year at the high end of its cost guidance range. Barrick has a significant safety cushion between current gold prices and the price at which the company digs the precious metal.

Improvement prospects
Barrick has stated that 75% of 2013 production comes at all-in sustaining cost below $800 per ounce. It's the remaining 25% that lifts the total guidance to over $900 per ounce. The company could either sell those assets or implement additional cost-cutting measures.

The process of dealing with higher-cost assets is already under way. Barrick has sold Barrick Energy for $439 million and three Western Australian mines for $300 million. The management shows that they are ready to continue this process. Once Barrick gets rid of poor-performing mines, total costs would decrease.

Newmont Mining is taking similar actions. The miner has sold its stake in Canadian Oil Sands for $578 million. In addition to that, the company has recently signed a letter of intent to sell its Midas mine to Waterton Global. Newmont Mining has been slow in cost cutting, and it has higher costs than its peers. I think that the company should be more aggressive in divesting non-core assets if it wants to turn its stock around.

Goldcorp, which enjoys a balance sheet with very little debt, has chosen a different strategy. Unlike Barrick and Newmont, Goldcorp states that it is ready to acquire new mines if it finds attractive targets. The company expects to push costs below $1,000 per ounce in 2014. However, this strategy would be difficult in implementation, because miners try to sell their high-cost assets while preserving low-cost ones.

Pascua-Lama
The Chilean Supreme Court has recently announced its ruling on the Pascua-Lama project. Barrick would be able to continue its work on the projects after it has completed the water management system. The company expects to finish this work at the end of 2014, while the first ore from Chile is expected to come by mid-2016.

The Pascua-Lama story clearly weighs on the stock. However, I think that the political risk associated with the project is overvalued. The project is just too big for the Chilean government to stop it. Chile is not rich enough to throw away the potential monetary benefits of Pascua-Lama. It means that once the environmental requirements are fulfilled, Barrick would be able to finish the work and start producing gold.

Bottom line
Barrick Gold has the lowest costs among miners of its size. The company has a clear strategy to bring these costs down even more. Although the level of debt is significant, it does not endanger the company's prospects. The risks are present, but they are worth the potential upside. However, if you want to stay on the safe side, you could choose Goldcorp. This miner has a very healthy balance sheet which would protect the company in case gold prices fall even lower.