Barrick Gold produced 6.12 million ounces of gold in 2015, its last 6 million-plus ounce year, already substantially down from its peak production of 7.7 million ounces in 2010 and 2011. Barrick’s all in sustaining cost (AISC) for 2015 was US$831/oz. Perhaps more importantly, Barrick upped its 2016 guidance to 5.25 – 5.55 million oz. at an AISC. of US$ 740 - 775/oz. after its third quarter. While Barrick has been rationalizing assets, reducing debt and squeezing its mines to maximize production and minimize costs, the world's number two gold miner Newmont Mining has been expanding, topping 5 million ounces for the first time in 2015. Both Barrick and Newmont have stated that they are aiming for an AISC below US$700/oz. after the next few years, which would allow them to maintain positive cash flows even at US$1,000/oz. gold price. Early in 2016, Newmont said its output will "remain stable at between 4.5 and 5.0 million ounces through 2020," but the Denver-based miner also said unapproved projects "represent upside of between 250,000 and 400,000 ounces of gold production beginning in 2018."

At the release of third-quarter results, and as part of its disposal of non-core assets, Barrick President Kelvin Dushnisky said the process to sell Kalgoorlie is "robust" with "interest from inside and outside Australia." The Kalgoorlie “super pit asset” is a 50% joint venture with Newmont, which operates the mine and may be a candidate to secure 100% of this asset. However, there are reportedly other interested players. Barrick is reported to be seeking to sell a number of non-core assets, among the largest of which are a 50% interest in Kalgoorlie (attributable 2016 guidance of 350 - 365,000 oz. at US$670 - 700/oz. AISC) and a 63.9% interest in Acacia an African miner (attributable 2016 guidance of 480 - 500,000 oz. at US$950 - 980/oz. AISC). The rapid and unexpected decline in the price of gold since the US elections on November 8th, followed by the US Fed rate increase last week, could frustrate Barrick's sales plans, making it difficult for purchasers to raise funds.

Barrick has reported good progress with ongoing debt reduction from US$13.1 billion at the end of 2014, to US$9.97 billion at the end of 2015, to US$8.54 billion at the end of third-quarter 2016, and reports to continue on track for its target of US$8 billion by the end of 2016. John Thornton, Barricks Executive Chairman, has recently declared “Barrick is back” referring to a dramatic improvement in stock price and substantive progress on debt reduction, both assisted by an upswing in gold prices from the lows experienced at the start of 2016, at least pre-November 8th. Newmont sports one of the stronger balance sheets in the gold sector. The company embarked on a debt reduction program earlier than its rivals. It has been building its portfolio, acquiring the Cripple Creek & Victor gold mine in Colorado last year. Newmont also has five key projects in the execution stage, including the Turf Vent project in Nevada and the Merian mine in South America, which is expected to start production late in 2016. If Newmont acquires the other 50% of Kalgoorlie and its production guidance pans out, it also adds new production and Barrick's planned non-core asset sales become a reality – it is quite possible that Newmont will be catapulted to #1 by next year.

Friday December 16, 2016: Barrick NYSE market capitalization US$ 28.36 Bn Newmont NYSE market capitalization US$ 16.40 Bn However, Barrick has a prodigious and unmatched pipeline of new mine projects waiting in the wings. Their hurdle for development is a long-term gold price of US$1,200 and 15% return on investment. If Newmont temporarily takes the production crown, a leaner and meaner Barrick will be hot on their heels. If the gold price cooperates, Barrick will be developing some of the world’s best gold projects, ready to take back the lead once again. - Peter R Jones, Executive Vice President, Century Global CommoditiesCorporation