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Barrick (GOLD) and Loncor Strengthen Partnership in DRC

Zacks Equity Research
·3-min read

Barrick Gold Corporation GOLD and Loncor Resources Inc.’s subsidiary — Adumbi Mining SARL — have inked a new joint venture (JV) agreement for two exploitation permits obtained by Adumbi Mining. The permits cover the ground adjoining the Loncor’s Imva area within the Ngayu gold belt in the northeast of the Democratic Republic of the Congo (“DRC”).

The purpose of this new JV is to conduct exploration activities on the JV permit properties held by Adumbi Mining for evaluating possible development and mining opportunities.

Notably, the Ngayu gold belt is operated by Barrick and lies around 220 kilometers from the Kibali gold mine. In 2019, Kibali produced 814,000 ounces of gold at all-in sustaining costs (AISC) per ounce of $693.

Per the new JV, Barrick will provide funds and manage all exploration operations of the earlier mentioned JV permit properties until the pre-feasibility study is completed. A special purpose vehicle (“SPV”) will be formed to hold the specific discovery areas once the JV committee decides to go ahead with a full feasibility study.

Barrick will hold 65% of the SPV and Adumbi Mining will retain the remaining 35% interest, in accordance with the DRC’s free carried interest requirements. The completion of the JV deal is expected by Jul 18, 2020, which is subject to certain customary closing conditions.

Barrick’s shares have surged 74.3% in the past year compared with the industry’s 52% rally.

For 2020, Barrick now anticipates attributable gold production in the range of 4.6-5 million ounces, down from previous expectation of 4.8-5.2 million ounces. AISC are expected in the range of $920-$970 per ounce, unchanged from the prior view. Cost of sales is expected in the range of $980-$1,030 per ounce, unchanged from previous guidance.

The company continues to expect copper production in the range of 440-500 million pounds at AISC of $2.20-$2.50 per pound and cost of sales of $2.10-$2.40 per pound.

Zacks Rank & Key Picks

Barrick currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Sandstorm Gold Ltd SAND, Harmony Gold Mining Company Limited HMY and AngloGold Ashanti Limited AU, all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Sandstorm Gold has an expected earnings growth rate of 33.3% for 2020. The company’s shares have surged 71.8% in the past year.

Harmony Gold has an expected earnings growth rate of 28.6% for fiscal 2020. Its shares have returned 87.7% in the past year.

AngloGold has an expected earnings growth rate of 109.9% for 2020. The company’s shares have surged 71.3% in the past year.

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