Is Barrick Gold A Scam Or Legit Company?

Item: Barrick Gold
Rating: 4.2
Author: Greg Morrison

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Barrick Gold is a gold and copper mining company based in Canada. It is touted as one of the largest companies in the mining industry, with operations in 13 countries in Africa, North and South America, Saudi Arabia, and Papua New Guinea. The company is listed on the Toronto Stock Exchange and New York Stock Exchange. Its production capacity has increased in leaps and bounds over the years, and in 2020, it produced 4.8 million ounces of gold and 457 million pounds of copper. The company expects to produce more or less the same level of production in the year 2021.

Overall financial performance has been outstanding, with its net earnings reaching $2.3 billion in 2020. The adjusted earnings per share went up by 125% in the same year to reach $1.15, and its NYSE share price went by 23%. The company has performed well amid tough times attesting to the belief that gold is a safe haven investment that many investors use to hedge their investments.

It has an outstanding crop of leadership which has been instrumental in its success. Mark Bristow, the Chief Executive Officer, has particularly been pivotal in steering the company to its success. He was instrumental in the $6.5 billion merger with Randgold Resources and oversaw the formation of Nevada Gold Mines, which resulted from combining Newmont and Nevada assets. He has played a key role in the development of sustainable mining in Africa.

The company has strong corporate governance, which is anchored on a sustainability strategy. While conducting its business operations, it recognizes the importance of integrating environmental, economic, and social considerations into sustainability. Its sustainability vision has four pillars: minimizing environmental impact, creating economic benefits, protecting health and safety, and respecting human rights. Exploiting natural resources while minimizing environmental impact is vital in this nature of business.

The company engages in corporate social responsibility by contributing to its host countries' economic and social development. Its policy requires that the company invests in a partnership that delivers mutual responsibility. It buys local materials and hires locals wherever possible. The policy thus helps inject capital inflows, create job opportunities, and enhance the skill capacity of the host countries. In 2020, its economic contribution across the 13 countries amounted to $8.4 billion. This was in the form of payments and remittances to employees, suppliers, and governments.

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Table of Contents

What Investors Think About Barrick Gold

Is the Company Great to Work for?

Pros and Cons of Barrick Gold

Is Barrick Gold a Scam?

What Investors Think About Barrick Gold

Many investors believe in the company in that it is publicly traded in NYSE and TSX. The fact that it has continued to attract a torrent of investors in the New York Stock Exchange and Toronto Stock Exchange is an indication that people believe in it. Institutional investors include Capital World Investors, Vanguard Group, Royal Bank of Canada, Blackrock, and Flossbach von Storch. Its share price has performed well over the years, reflecting the confidence investors have in the company.

While a publicly-traded company is a big vote of confidence, I would expect a savvy investor to go an extra step and interrogate the current and future performance of the company. If you are considering investing in the company, you need to analyze its annual reports to gauge its growth potential, debt obligations, cash flow, and shareholder equity. You might also need to investigate financial key performance indicators (KPIs).

For example, the company has shown resilience in tough economic times and is expected to maintain the same trajectory in the immediate future. The projected gold production in the year 2021 will range between 4.4 and 4.7 million ounces. Copper production is expected to range from 410 to 460 million pounds. In absolute terms, this is a humungous scale of operation, and any investor would be interested in investing in the company. While the projected productions levels and other financial KPIs are good signs that the company is likely to perform well in the future, you should also research the expected future gold and copper prices as they can potentially hurt your investment.

Is the Company Great to Work for?

Barrick Gold is a great place where you can kick-start your career. Here you will find a bunch of talented professionals with different backgrounds. It employs people from various professional backgrounds, including geologists, engineers, accountants, environmentalists, health specialists, IT technicians, and finance officers. The company has immense growth opportunities and offers a work-life balance.

It offers decent salaries and benefits, which makes it attractive to many job seekers. If you are good at your work, you will not have a problem moving up the corporate ladder and consequently get a salary increment. If you want to excel in this company, you have to put your best foot forward because promotion is performance and merit-based.

The company has a great working culture which is underpinned by strong work ethics and values. Employees professionally conduct themselves and are guided by strong ethics. The company has inculcated a culture of teamwork. As such, there are assignments where you will be expected to work in teams. It also fosters a culture of innovation, thus encouraging its employees to think outside the box. If you are looking to work in a fast-paced and innovative environment, then Barrick Gold might be the place for you.

Barrick Gold puts the health and safety of its workers first. This is consistent with the World Health Organization requirement that stresses the need to ensure occupational health and safety of employees. Mines are a complex working environment due to moving equipment and heavy vehicles. There are potentially hazardous chemicals used in the extraction of minerals from ore. This calls for the company to put safeguards in place to ensure that the health and safety of its employees are not put at risk. Barrick employs industry best practices and a structured approach to mitigate health and safety risks. It is one of the companies in the mining industry with a small number of safety-related incidents.

Nonetheless, the company has had a fair share of problems, with some people saying that there have been many management changes that destabilize it. Some say they are forced to work for long hours, thus undermining the work-life balance. There have also been concerns that the company does not treat its business partners well. Some equipment and workshop facilities are not in good condition and hence need to be replaced.

If you are considering looking for a job in any of these companies, you should do your research well and weigh in with your career goals. While Barrick Gold promises many good things in terms of your career progression and good working environment, there are few things that they don't do well. There will be the good and the bad side of the company, and this is pretty much what you will find in any other company. In the grand scheme of work, I can recommend Barrick Gold because it's a well-established company with a great working environment.

Pros and Cons of Barrick Gold

If you are considering investing or contracting the company for gold or copper exploration, you may want to analyze the company from all angles critically. There will always be the good and the bad side, but you can narrow down to few key things that you consider necessary when making investment decisions. Here are the advantages and disadvantages of the company.

Advantages of Barrick Gold

Proficient in keeping AISC Low: All-in sustaining costs (AISC) account for a significant proportion of mining companies operating costs, including capital expenditure, production costs, and general and administrative costs. One of Barrick Gold's competitive advantages is its ability to keep AISC per ounce of gold produced at a minimum compared to its competitors. Low AISC translates into higher profits. It means that the company can deliver high shareholding value because of high profitability compared to its peers, which a savvy investor would find attractive.
High Ore Grades: Barrick Gold produces higher ore grades because of its ability to marshal its advanced equipment and resources to carry out high-quality mines. The higher the quality of gold ore, the easier it is to extract it from the ground because the less the ore will need to be dug. Their outstanding quality of mines makes it more preferred, which increases its market share.
Strategically Located: Barrick Gold is located in countries with low geopolitical risks. These include Peru, Chile, Zambia, Tanzania, Saudi Arabia, Papua New Guinea, Argentina, the United States, Canada, and the Dominican Republic. These are countries that have low political risks meaning that their operations cannot materially be interfered with. The company uses an exploration system that allocates exploration dollars based on the perceived expected return and political risks.
Scale of Operation: The company is hungry for growth, increasing its explorations activities, and merging with other companies. Scaling up its operations and merging helps the company create synergies, increase its production, and achieve large-scale operation economies. If you are an investor eyeing a company with a real potential for growth, Barrick Gold would be a good bet.
Strong Financial Position: Investors eyeing a company with a strong financial position will find Barrick Gold attractive. A company with strong financial muscles would have tremendous potential for growth and deliver good performance since it can marshal the resources to expand or acquire modern equipment. As of 2020, the total company assets totaled $ 46 billion. It also had healthy current and debt-to-equity ratios of 3.67 and 0.61, respectively. These are indicators of a good company for you to invest in.
Strong Employee Base: It has approximately twenty thousand employees, which enables it to deliver efficiently. The nature of their work requires that a company has an optimal combination of human capital and machine technology to help it achieve operational excellence. It's no surprise that most of its projects are completed in good time. If you are looking for a company that can do your exploration, Barrick Gold may be a good choice for you because it is known for delivering big projects on time.

Disadvantages of Barrick Gold

Environmental Damage: The company has been put in the spotlight many times for polluting the environment. It has been accused of leaving mercury and cyanide elements at exploration sites poisonous to human beings. This has been seen as irresponsible because they are supposed to ensure the safety of their mining areas.
Volatile Gold prices: The international prices of gold fluctuates a lot which threats the stability of the company. While this can sometimes work in favor of the company, it can hurt its performance if the prices slump. The fluctuation in prices is occasioned by many factors, including forces of demand and supply, inflation, currency movements, change in monetary policies, and uncertainty. As you invest in these types of companies, you need to know that prices are bound to change from time to time, affecting your investment. While it is not easy to predict where the prices will go in the future, you can always try to consult experts on the future expectations of the prices to make informed investment decisions.
Stringent Regulations from the Government: Mining companies operate under tight government regulations in an attempt to curb environmental degradation. The host countries can penalize them for contravening the rules. In some cases, the rules are so demanding that it becomes unviable to carry out exploration activities. In many cases, they have to undergo a prolonged clearance process that interferes with their operations' smooth running.
Bribe Allegations: Some years back, the company had had to fight bribe allegations that threatened to tarnish their name. In 2014, Barrick Africa paid $400,000 to a Tanzanian government official, which an anonymous person alleged was a bribe. The company was accused of bribing the Tanzania government to influence Africa Barrick Gold's business interest.

Is Barrick Gold a Scam?

Barrick Gold is undoubtedly not a scam. This is a public listed company that engages in gold and copper exploration. It is listed in New York Stock Exchange and Toronto Stock Exchange, meaning it is regulated. The company's corporate governance structure is composed of executive management and a board of directors. If you are an investor who is eyeing the company, you should not have an iota of doubt as to the legitimacy of the company.

A company of this stature is prone to public scrutiny, and there may be people out there who may level unverified allegations about the company. While I agree sometimes the company may have found itself on the wrong side of the law, it does not mean it is not a good company. Barrick Gold is a company where you can invest and reap big from the investment.

Although we do think that Barrick Gold is a solid company, we believe that there are better companies out there to make your investment with if you are looking to invest in precious metals.

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