Gold stocks sell off – Barrick drops 11%
After hitting five month highs last week, gold was pushed lower again on Tuesday as investors rotate out of safe haven assets and into riskier equities with the tech-laden Nasdaq market in New York hitting record highs.
Gold for delivery in June, the most active contract on the Comex market in New York, slumped to a low of $1,262.80 an ounce in early afternoon trade, a percentage point lower than Monday's close and a two-week low.
The sell-off in gold stocks was more severe led by Barrick Gold Corp (NYSE:ABX, TSE:ABX) which was hammered down 11.2% after reporting first quarter earnings that came in below expectations. Barrick is now worth $19.5 billion in New York, trading at levels last seen in January.
Barrick, the world's largest gold miner in terms of output, slashed its guidance for the year due to ongoing problems at its Veladero mine in Argentina. Barricks' full-year gold production is now expected to be 5.3–5.6 million ounces, down from its previous range of 5.6–5.9 million ounces.
Barrick expects normal operations at Veladero to resume in June pending government approval and the lifting of judicial restrictions imposed by the South American nation after a cyanide solution spill at the property
The company also sold a 50% stake in Veladero for $960 million to China's Shandong Gold and the transaction constitutes roughly two-thirds of its lowered output guidance. Barrick expects normal operations at Veladero to resume in June pending government approval and the lifting of judicial restrictions imposed by the South American nation after a cyanide solution spill at the property.
Losses at Newmont Mining Corp (NYSE:NEM) were more modest with the counter losing 2.7% for a market capitalization of $17.2 billion. Denver-based Newmont announced yesterday that it grew production by 9% in the first quarter to 1.23 million ounces.
Newmont approved the Subika Underground and Ahafo mill expansion projects in Ghana during the first quarter, which is expected to improve volumes beginning in 2018. Newmont is retaining its guidance for this year at between 4.9m – 5.4 million and the company upped its longer term output forecast to 4.7m – 5.2m.
It's been a busy Q1 for Newmont, the company also announced agreement to secure rights to develop a prospective new gold district in the Yukon with Goldstrike Resources. The company said it is on track for commercial production at the Tanami Expansion Project in Australia mid-2017.
The world's third largest gold producer behind Newmont, AngloGold Ashanti (NYSE:AU) slid 1.4% in Tuesday. The company's ADRs are worth $4.6 billion in New York and is just holding onto double digit gains so far in 2107. Johannesburg-based Anglogold reported an 8% decrease in annual production to 3.6m ounces in 2016.
Earlier in April the company indicated it may revive its Obuasi mine in Ghana on care and maintenance since the end of 2014. AngloGold lifted a force majeure on Obuasi in February after the removal of thousands of illegal miners by Ghanian security forces. Obuasi is the world's 17th largest gold deposit with resources of more than 27m ounces and reserves grading an eye-popping 7 grams gold per tonne.
Goldcorp (NYSE:GG TSE:G) shares dropped more than 3% shaving the value of the Vancouver-based company to just under $12 billion in New York. World number four producer Goldcorp recorded a steep drop in production last year of 17% or nearly 600,000 ounces and will release its first quarter results tomorrow.
The world's number five gold producer with 2.8m ounces last year, Kinross Gold (NYSE:KGC, TSX:K) was one of the hardest hit on Tuesday losing 6.8%. Toronto-based Kinross is now worth $4.2 billion on the NYSE after a 25% decline over the past year.