Canadian mining stocks are increasingly becoming more attractive for investors to consider. The rising price of gold has boosted the value of companies like Barrick Gold (TSX: ABX) in recent quarters. In fact, this stock is now trading near its highest level over the past year, with the potential to hit multi-year highs in short order.
This Canadian gold miner is one of the largest in the world, meaning it provides excellent exposure for investors looking to play gold. If gold prices continue to rise, that should be bullish for investors in Barrick Gold. Here’s why.
What Barrick Gold does
A top precious metals miner based in Canada, Barrick Gold operates a number of mines around the world. These mines span North America, Australia, Africa, and South America. The company develops and explores mineral properties and owns and operates mines, such as Nevada Gold Mines, Buzwagi, Hemlo, North Mara, and others.
Barrick Gold also produces commodities such as silver, gold, and copper and sells gold bullion in the gold spot market. Furthermore, it executes copper operations in Lumwana, Zaldivar, and Jabal Sayid mines.
Rising gold prices boosting Barrick’s financial performance
In the first quarter of 2024, Barrick Gold reported revenue of US$2.7 billion and cost of sales of US$1.9 billion. This translated into net earnings for the period of US$295 million and adjusted net earnings of US$333 million. In addition, the company highlighted attributable EBITDA of US$907 million and attributable EBITDA margin of 41%, an increase of 5% year over year.
These strong results were mainly due to rising gold prices, which are currently trading near an all-time high. With most of the company’s debt denominated in dollars and its revenue a function of precious metals prices, the recent surge we’ve seen across certain commodities has boosted the profile of this miner. Trading around 21 times earnings with a 2.2% dividend yield, this is an attractive stock at current levels. On future dips, this is a stock that could become even more attractive as both a value and dividend play.
A mining stock worth buying and holding long-term
Barrick Gold is one of the largest gold producers in the world, delivering unparalleled growth of reserve base and maintaining the highest gold reserves grade among its competitors. Since the year-end 2019, the company has replaced over 140% of mined gold reserves and has returned US$4.9 billion to shareholders in the form of dividends, share buybacks, and returns of capital.
In the industry-leading shareholder alignment, Barrick Gold has approved a US$1 billion share-buyback program and reduced net debt by US$ 3.5 billion. Furthermore, the company has invested US$9.8 billion since 2019 to grow and expand its operations globally. These cash flows and robust business models should assist the company in generating higher revenue and increasing its ability to pay even higher dividends to shareholders.
