Assessing Horseman Capital’s 4Q14 key positions (Part 9 of 12)
(Continued from Part 8)
Horseman Capital and Barrick Gold
Horseman Capital sold its position in Barrick Gold (ABX) in 4Q14. The position accounted for 2.96% of the fund’s 3Q14 portfolio.
About Barrick Gold
Barrick Gold operates gold mines and advanced exploration and development projects. The company operates in five continents.
Barrick sells in the world market through the following distribution channels:
- gold bullion in the gold spot market
- gold and copper concentrate to independent smelting companies
- copper cathode to various manufacturers and traders
As of December 31, 2013, Barrick Gold’s proven and probable mineral reserves were 104.1 million ounces of gold, 888 million ounces of silver contained within gold reserves, and 14 billion pounds of copper.
In December, Barrick completed a joint venture for Jabal Sayid copper mine in Saudi Arabia. Barrick expects Jabal Sayid to begin shipping low-cost concentrate in early 2016. Jabal Sayid had 1.4 billion pounds of copper in proven and probable reserves as of December 31, 2013.
3Q14 results
Barrick Gold reported net earnings of $125 million or $0.11 per share. Adjusted net earnings were $222 million or $0.19 per share compared to 577 million in 3Q13. The decrease was primarily due to lower sales volumes and lower realized prices for both gold and copper, which was partially offset by lower cost of sales.
Operating cash flow was $852 million compared to $1.2 billion in 3Q13, which reflects lower sales volume and lower gross margins, partially offset by lower income tax.
In the third quarter, the company produced 1.6 million ounces of gold and 131 million pounds of copper. Management said, “The company’s five cornerstone mines produced 1 million ounces of gold at average all-in sustaining costs (or AISC) of $696 per ounce in the third quarter. These mines are anticipated to contribute about 60% of production in 2014 at average AISC of $730-$780 per ounce, maintaining Barrick’s position in the first quartile of the industry cost curve.”
4Q14 outlook
The company narrowed its gold production guidance from 6 to 6.5 million ounces of gold to 6.1 to 6.4 million ounces. The company increased its copper production guidance from 410 to 440 million pounds to 440 to 460 million pounds, as Lumwana resumed its operations ahead of expectation.
Horseman’s key positions in 4Q14
Horseman Capital added a new position in Alibaba (BABA). The fund increased its stake in TJX Companies (TJX), Vipshop Holdings (VIPS), BNY Mellon (BK), Wells Fargo (WFC), and Goldman Sachs (GS). The fund sold its positions in Comerica (CMA), Barrick Gold (ABX), IAMGOLD (IAG), and Harmony Gold Mining (HMY). The fund reduced its stake in Newmont Mining (NEM).
In the next part of the series, we’ll discuss Horseman’s position change in IAMGOLD.
Continue to Part 10
Browse this series on Market Realist: