Barrick Gold Corp. rebounded from a record monthly decline after intensifying efforts to strengthen its balance sheet as slumping prices squeeze margins.
The world’s largest producer of the metal jumped as much as 8.1 percent in Toronto before closing up 3.8 percent. The stock tumbled 35 percent in the previous month as gold slumped to five-year lows. It was the company’s steepest four-week drop since at least 1986 when Bloomberg records begin.
Barrick cut dividends, lowered its output forecast and is preparing to sell more U.S. assets as it targets $2 billion expenditure cutbacks by 2016, according to its quarterly report distributed after the close of trading Wednesday. The Toronto-based miner posted adjusted earnings that missed analysts’ estimates as previous measures to trim expenses failed to offset the price slide.
“New management has made a strong effort to reset street opinions, but the share price has set new lows,” Mackie Research analysts Barry Allan and Ryan Hanley wrote in a research note Thursday, raising their recommendation to buy from hold. “We see fundamental value creeping in even, though it is a bit early yet to gauge ABX’s success on restructuring.”
Miners are battling to lower costs and debt levels after gold’s slump deepened as dollar gains and the prospect of higher U.S. interest rates reduce demand for alternative investments as an inflation hedge.
Barrick shares have tumbled 55 in the past year as its U.S. mines bear the full brunt of the price slump, while mines elsewhere get some relief from weaker local currencies.
Net losses narrowed to $9 million, or 1 cent a share, in the second quarter, from $269 million, or 23 cents, a year ago. Earnings excluding one-time items were 5 cents a share, trailing the 6-cent average of 21 analysts tracked by Bloomberg.
The company has sold $2.45 billion in assets so far this year, including stakes in its Porgera mine in Papua New Guinea to Zijin Mining Group Co. and Zaldivar mine in Chile to Antofagasta Plc. Barrick said it expects to book a $400 million impairment in the third quarter for the Zaldivar sale.
On Wednesday, it said it had received interest from would-be buyers of non-core assets in Nevada and Montana.
The company also announced a gold and silver streaming agreement with a unit of Royal Gold Inc., for $610 million upfront, plus continuing payments for metal delivered under the deal. It said it reduced debt by $250 million in the first half.