CHICAGO, Oct. 16, 2013 /PRNewswire/ --Today, Zacks Equity Research discusses the U.S. Gold Mining, including Barrick Gold Corporation (NYSE:ABX-Free Report),Harmony Gold Mining Co. Ltd (NYSE:HMY-Free Report), Newmont Mining Corp. (NYSE:NEM-Free Report), Kinross Gold Corp. (NYSE:KGC-Free Report) and Goldcorp Inc. (NYSE:GG-Free Report).
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Industry: Gold Mining
Link: http://www.zacks.com/commentary/29432/Mining-%28Gold%29-Update-&-Outlook---Oct-2013
As we delve into the June-end quarterly numbers of the gold companies in our coverage, including Barrick Gold Corporation (NYSE:ABX-Free Report),Harmony Gold Mining Co.Ltd (NYSE:HMY-Free Report), Newmont Mining Corp. (NYSE:NEM-Free Report), Kinross Gold Corp. (NYSE:KGC-Free Report) and Goldcorp Inc. (NYSE:GG-Free Report), we see earnings have taken a beating across the board due to the decline in average realized gold prices.
Shares of Newmont, Barrick Gold, Kinross, Goldcorp, Agnico Eagle and Harmony Gold hit their 52-week lows in the Jun-Aug 2013 timeframe driven by the low gold prices, second quarter results and trimmed guidance.
Furthermore, the companies are also riddled with their individual operational issues. Barrick's stock had fallen under pressure following the announcement that the company is suspending construction at its Pascua-Lama mine in Chile, in response to a court order from a Chilean court citing environmental concerns. However, in September, the Supreme Court of Chile issued a ruling which upheld the environmental approval for the Pascua-Lama project in Chile.
The Pascua-Lama mine, located at the Chile-Argentina border, is one of the world's largest gold and silver resources with nearly 18 million ounces of proven and probable gold reserves, and an anticipated mine life of 25 years. Barrick incurred $5.1 billion in asset impairment charges against the carrying value of the Pascua-Lama project in the second quarter.
The price decline added to the woes of the industry that is already grappling with rising costs, labor issues, strikes, delays and/or the cancellation of projects. This has put gold miners on the defensive, forcing them to cut costs.
If prices fall further, margins will be constrained as the price of gold closes in on the cost per ounce of the companies.
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