Barrick Gold Corporation’s GOLD fully-owned subsidiary, Barrick Gold Inc, recently entered into a definitive agreement with Skeena Resources Limited. Per the agreement, Skeena will exercise its option to purchase the Eskay Creek project. Barrick will also waive its back-in right on the Eskay Creek project.
Further, the consideration for the transaction includes issuance of 22,500,000 units by Skeena. Each unit issued will comprise one common share of Skeena and one-half of a warrant. Each full warrant entitles Barrick to acquire one additional common share of Skeena at an exercise price of C$2.70 each, until the second anniversary of the closing date. The transaction also includes a grant of 1% net smelter return (NSR) royalty on the entire Eskay Creek land package and a contingent payment of C$15 million. The deal is expected to close in fourth-quarter 2020, subject to customary conditions.
Post the transaction closure, Barrick will hold 24,075,000 Skeena common shares that represents around 12.4% of Skeena’s issued and outstanding common shares on a pro-forma basis. If the warrants are exercised in full pursuant to the transaction, Barrick will hold around 17.2% of Skeena’s issued and outstanding common shares. Notably, Barrick is acquiring the Units for investment purposes.
Barrick’s shares have gained 45% in the past year compared with the industry’s 52.9% rally.
Barrick’s adjusted earnings per share increased 155.6% year over year to 23 cents in the second quarter. The figure also beat the Zacks Consensus Estimate of 19 cents.
Barrick recorded total sales of $3,055 million, up 48.1% year over year. The figure topped the Zacks Consensus Estimate of $2,656.5 million.
For 2020, Barrick continues to anticipate attributable gold production in the range of 4.6-5 million ounces. All-in sustaining cost is 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 the previous guidance.
Zacks Rank & Other Key Picks
Barrick currently sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks in the basic materials space include Equinox Gold Corp. EQX, Eldorado Gold Corporation EGO and Golden Star Resources Ltd. GSS, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Equinox Gold has an expected earnings growth rate of 255.2% for 2020. The company’s shares have surged 96.3% in the past year.
Eldorado Gold has an expected earnings growth rate of 2,225% for 2020. Its shares have returned 34.8% in the past year.
Golden Star Resources has an expected earnings growth rate of 6.3% for 2020. The company’s shares have surged 49.8% in the past year.
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