Following on the heels of estimate beats by both Goldcorp (GG +0.00%) and Yamana Gold (AUY +0.00%), it was widely expected that the world's largest gold producer, Barrick Gold (ABX 2.48%), would deliver similar results. Unfortunately, its operations lacked luster for the fourth straight quarter. Add the fact that Freeport-McMoRan Copper & Gold (FCX 2.03%) is up big today on the news that Cerro Verde, a company FCX owns a 53.6% stake in, boosted its year-over-year profits by 34% based on copper production, sees Barrick Gold investors wondering when their investments will start panning out as planned.
After transitioning to a new CEO in June, Barrick Gold has continued to see mining financial results collapse under the weight of pricing pressures. Its cost per ounce to mine gold is now predicted to be $575-$585/ounce versus previous guidance of $550-$575/ounce.
From a growth standpoint, ABX is struggling trying to get the Pascua-Lima mine online in Chile. Originally slated for 2013, operations are not expected to commence until the second half of 2014, and for a much higher cost. The expected capital expenditures needed to make this mine production-ready has risen by almost $4 billion.
With so much going wrong at this gold behemoth, it might be wise for investors to take a step back and really evaluate the future prospects for such a large company in comparison to its peers.
