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Gold Rush

16 February 2017 by lberuti

ABX ( Barrick Gold Corporation ) reported yesterday night their fourth quarter results and beat analysts’ expectations as they managed to lower its cost of producing gold close to their target of $700 per ounce. It was a solid quarter with revenues of $2.2Bln which translated to a free cash flow of $385mln. The company reduced total debt by roughly 19% in 2016 to $7.9Bln and said they plan to cut debt by a further $2.9Bln by the end of 2018, half of which should be achieved in 2017. ABX also boosted their gold production estimate while saying they would manage to lower all in production cost – to between $750 to $790 per ounce – compared with earlier guidance. The management reiterated that their “overarching goal is to grow (their) free cash flow per share” and investors rewarded them by lowering ABX’s 5-year risk premium by 10bps to 95bps, extending its impressive run since the beginning of the year – it started at 157bps -. Meanwhile, the broader credit market did finally widen a bit – marginally though with iTraxx Main closing at 73bps (+1.5bps), iTraxx Crossover at 295bps (+4bps), CDXIG at 64bps (+1bp) and CDXHY at 324bps (+7bps) -, but once again the single names felt well offered and the widening indices translated into slightly more positive bases.