Talk about a face-lift!
After taking its long-overdue shot in the foot last year to cancel the gold mining industry's most infamous (and formerly paralyzing) book of gold hedges, Barrick Gold
Barrick this week reported adjusted net income of $741 million for the first quarter of 2010, which represents a phenomenal 149% increase over its prior-year result. Even as gold's ascent took a minor breather during the quarter -- after peaking near $1,220 per ounce in early December -- Barrick notched a sequential earnings gain of 22.7%.
The miner increased production 19% over prior-year volume, yielding more than two million ounces of gold in a single quarter. As a reference point to understand Barrick's enormous scale of operations, consider that well-known mid-tier miner Yamana Gold
For all that heft, Barrick is well poised to grow larger still. After taking in net proceeds of $882 million for its recent spin-off of African operations, Barrick sits atop the golden food chain with a cash balance of $3.5 billion and an additional $1.5 billion in untapped credit. Even in this highly competitive environment for gold acquisitions -- exemplified by rival Goldcorp's
Gold is presently exhibiting impressive price-strength. In fact, as denominated in several key currencies like the euro, the pound, and the yen, gold has already broken out to fresh new all-time highs. I believe we have entered the latter stages of this nearly five-month corrective pause in U.S. dollar gold prices. Recognizing this, I believe that cash-rich majors like Barrick and Newmont will not wait long before triggering the next round of consolidation that continues to alter the landscape of this dynamic industry.
For Barrick, which is already progressing rapidly toward production at key near-term growth projects like Pascua Lama and Pueblo Viejo, it may finally be time to make the long-anticipated move to acquire Donlin Creek joint-venture partner NovaGold Resources
