Barrick Gold Corporation (NYSE: GOLD) presents a compelling investment thesis backed by robust catalysts, thoughtful management execution, and a deeply derisked reserve base that aligns with the evolving dynamics in the gold and copper markets.
Catalysts: Reserve Expansion, Strategic Projects & Commodity Tailwinds
The key catalyst driving Barrick’s upside is the significant growth in gold and copper reserves, underscoring its exploration success and long-term sustainability. The company reported a 23% increase in attributable proven and probable gold reserves, equivalent to 17.4 million ounces, and added 24 million tonnes of measured and indicated copper resources, further diversifying its earnings mix.
Key assets like Lumwana and Reko Diq are expected to reshape the company’s production base. The Reko Diq Phase 1 budget of $5.6–$6 billion is projected to generate $74 billion in free cash flow over 36 years, becoming a cash machine that supports shareholder returns and balance sheet fortification.
Barrick also benefits from industry tailwinds: rising gold prices, inflation hedging, and global macroeconomic uncertainty continue to drive investor appetite for precious metals. Moreover, early exploration at the Super Block project in Jamaica, where Barrick holds an 80% JV earn-in right, suggests long-term upside optionality through grassroots discoveries.
Assumptions: Revenue & Earnings Outlook Over 5 Years
Assuming a conservative annual gold price of $2,000/oz, and stable copper prices around $4.00/lb, Barrick is likely to grow revenue at a CAGR of ~5%, reaching an estimated $16–17 billion by FY2029. This assumes a 30% increase in gold equivalent ounces production by decade’s end, as management targets, and includes incremental copper contributions from Lumwana and Reko Diq.
Earnings are projected to grow at a CAGR of ~7%, driven by:
- Operational leverage from higher throughput
- Reduced unit costs from process optimization
- Declining net debt, now under $700 million, which cuts financing costs
If management continues to improve margins through cost control (2024 margins rose to 17%, up from 11% in FY2023), EPS could exceed $2.00 within five years, marking a near-70% increase from current levels.
Risks: Execution, Geopolitics & Market Volatility
Risks include project execution delays at Reko Diq or Lumwana, which could affect the long-term earnings trajectory. Geopolitical risk is non-negligible, with recent disruptions in Mali—including export restrictions and the temporary closure of Loulo-Gounkoto—highlighting the fragility of operations in politically unstable jurisdictions.
Additionally, commodity prices remain volatile. A sharp correction in gold or copper prices could hurt near-term cash flows and investor sentiment. Regulatory changes, especially in Latin America and Africa, pose further uncertainty for taxation and operating permits.
Valuation: Compelling Entry Point with Room for Multiple Expansion
Barrick trades below intrinsic value, with a forward P/E multiple around 15x, while gold peers average closer to 18–20x. Based on projected FY2029 EPS of ~$2.00 and a normalized P/E of 18x (assuming steady gold price and stable operations), Barrick could reach a share price of $36, up from current levels, implying over 100% upside in 5 years.
In the 3–5 year horizon, as Reko Diq ramps up and gold prices remain supported by inflationary forces and central bank buying, free cash flow should remain robust, supporting increased dividends and buybacks. The company already returned $500 million via share repurchases in 2024 and maintains a sustainable $0.10 quarterly dividend.
Conclusion
Barrick Gold offers derisked exposure to both gold and copper, with a long runway for production growth, margin expansion, and capital returns. The stock may face periodic headwinds from geopolitics or commodity volatility, but its reserve base, exploration upside, and operational momentum provide a solid foundation for double-digit total returns over the medium term.
Recommendation: Accumulate on weakness with a long-term target of $30–$36. Fair value sits around $20 in the near term, with upside tied to execution at major projects and further commodity strength.
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Disclaimer
The user WaneInvestmentHouse has a position in NYSE:GOLD. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
