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Gold/Mining/Energy : Barrick Gold (ABX)
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To: Enigma who wrote (3230)1/3/2003 1:43:57 PM
From: Dundee Maples  Read Replies (2) of 3558
 
Interesting --
"Investors—and gold investors, in particular—have for months now been smelling trouble where Barrick is concerned, however. Barrick’s share price has been clearly the worst performer among gold majors; and not due solely to the fact that it was jettisoned from the S&P 500 during 2002. At the least, investors are suspicious of its hedges and potential future exposure to a sustained gold bull market; in any case, the more glamorous stocks to own now are those producers who remain unhedged.

We must go beyond even this, though, to wonder what this mining giant’s fate might be. Last Fall, the company made more than one announcement warning of production shortfalls, earnings woes and more. Many are asking what on Earth is going on. With declining production, can the company keep all its long-term obligations to deliver gold at any price? Now the ugly duckling in the sector, will Barrick have the clout necessary to purchase more and better production? Does its reduced earnings for 2002 mean that—already—the company is having to eat some recent losses on its hedge book; losses it’s tried to tell investors were virtually impossible? Nobody really knows for sure right now. But there are lots of questions; and Barrick’s share performance especially during the second half of 2002 tells us that something may be badly amiss. "

kitco.com
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