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Barrick (ABX) Invests in Reunion Gold, Acquires 15% Stake


Barrick Gold Corporation ABX declared that it has acquired 48 million common shares of Reunion Gold Corporation, representing roughly 15% of issued and outstanding common shares, on non-diluted basis, in a non-brokered private placement at a price of C$0.19 per share for a total consideration of C$9.12 million.

Barrick acquired the shares for the investment purposes. Subject to market conditions and other factors, the company may acquire additional common shares or other securities of Reunion or dispose of some or all of the common shares or other securities of Reunion that it owns.

Shares of Barrick rose 2.1% to eventually close the day at $14.07 on Dec 1.

Barrick’s shares have declined 13.1% in the past six months, underperforming the industry’s 2.1% dip.

Barrick, in October, narrowed its gold production and cost estimates for 2017. The company now anticipates full-year gold production in the range of 5.3-5.5 million ounces, at AISC of $740-$770 per ounce and cost of sales of $790-$810 per ounce.

Barrick is making progress with its cost-improvement programs. Its all-in sustaining costs (AISC) is among the lowest in the gold mining industry.

Barrick also remains committed to de-leverage its balance sheet. The company has cut its total debt by roughly $1 billion in third-quarter 2017 and reduced total debt by roughly $1.5 billion year to date, and exceeded the initial target to reduce debt by $1.45 billion for 2017.

However, Barrick is facing challenges from declining production. The highly volatile gold price environment represents another concern.

Zacks Rank & Stocks to Consider

Barrick currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Westlake Chemical Corporation WLK, Daqo New Energy Corp. DQ and Kronos Worldwide Inc. KRO. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Westlake Chemical has an expected long-term earnings growth rate of 10.6%. Its shares have moved up 76% year to date.

Daqo New Energy has an expected long-term earnings growth rate of 7%. Its shares have surged a whopping 195.1% year to date.

Kronos Worldwide has an expected long-term earnings growth rate of 5%. Its shares have rallied 131.7% year to date.

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