Barrick’s $3B buyback sets stage for spinoff

Barrick Mining (TSX: ABX; NYSE: B) launched a $3-billion share buyback on Monday as the world’s third-largest gold producer seeks to attract investors ahead of a planned spinout of its North American assets.

The Toronto-based miner announced the repurchase authorization after beating analyst estimates for first-quarter production despite reporting a 13% decline in first-quarter profit from the previous three months. Chairman John Thornton is prioritizing shareholder returns following a $500-million buyback late last year. 

Barrick is preparing to list a new company holding its Nevada joint venture, the Fourmile discovery and the Pueblo Viejo mine in the Dominican Republic by the end of 2026. Barrick has also indicated it will pursue acquisitions while scaling back exposure to riskier nations to improve valuation after years of declining output and operational challenges. Mark Hill became CEO this year after longtime chief Mark Bristow’s abrupt departure in September.

“Following solid execution and strong free cash flow, this authorization is intended to return cash to shareholders at a time when Barrick sees exceptional value in its own shares, particularly in anticipation of the planned IPO of North American Barrick,” the company said.

Shares in Barrick Mining gained 7% on Monday morning in Toronto to $63.19 apiece, valuing the company at $106 billion. They’ve traded in a 52-week range of $24.29 to $74. 

Gold price

Barrick beat analyst estimates for first-quarter earnings as record gold prices offset weaker production and helped drive a sharp rise in profit. The company’s average realized gold price climbed 66% year-over-year to $4,823 per oz., while all-in sustaining costs fell 4% to $1,708 per ounce.

Net earnings rose to $1.6 billion, more than triple year-earlier levels, despite gold production declining 5% to 719,000 ounces. Barrick forecast second-quarter output of between 730,000 and 770,000 oz., with production expected to increase further in this year’s second half.

BMO analyst Matthew Murphy said Barrick’s results reflected a strong start to the year, with free cash flow of almost $1.6 billion beating estimates and North American and Latin American operations outperforming expectations even as African assets lagged forecasts. Murphy added that lower-than-expected costs helped offset weaker production and left Barrick on track to meet full-year guidance.

“We started the year with another strong quarter,” president and CEO Mark Hill said. “Building on momentum from Q4, we operated safely and outperformed our plan on both gold production and costs.”

“Our focus for the year is clear: continue to improve safety performance, deliver on production and cost guidance, advance our growth projects on time and on budget, and execute the North American Barrick IPO to unlock further shareholder value,” Hill said.

Mali issues

Barrick continues to face operational pressure in Mali, where disruptions at the Loulo-Gounkoto complex have weighed on output and underscored the risks tied to unstable mining jurisdictions.

Last week, contractor Gounkoto Mining Services said it would shut down operations and lay off more than 600 workers after Barrick declined to renew its contract amid an ongoing dispute with the Malian government over taxes and control of the mine. Production at Loulo-Gounkoto remains below historical levels following months of disruption and provisional state administration, contributing to a 23% decline in Mali’s gold output this year.

The operational divide has become increasingly apparent. Open-pit operations at Baboto and Gara West have resumed under local operators, while the Gounkoto open pit and Yalea North underground mine remain idle. 

Barrick regained control of the complex from provisional state administrators in December, but restarting suspended operations has proven difficult as equipment deteriorates, spare parts run low and skilled workers depart during shutdowns.