Freeport-McMoRan Copper & Gold Inc. (FCX), Barrick Gold Corporation (USA) (ABX): Are Dark Days Still Ahead for These Miners?

In Q1 2012 Barrick Gold Corporation (USA) (NYSE:ABX) was commanding a whopping $1,691/ounce of gold. As noted above the current price is $1,386 — an almost 20% drop. Look for Q2 2013 quarterly results to begin reflecting this. Over this same time operating costs have climbed, future investment has been curtailed, and production has dropped.

But gold isn’t the only major mineral play that Barrick Gold Corporation (USA) (NYSE:ABX) has in its portfolio. It also mines copper. Oh, shucks. This is sounding familiar. I read somewhere recently that copper is also declining. I think it was that brilliant author from The Motley Fool.

Other players in the gold mining sector should see continued pressure based on the decreasing realized price. IAMGOLD Corp (USA) (NYSE:IAG) with their declining productivity and astronomically high extraction costs per ounce should be avoided.

Recently in their Q1 2013 report they showed a drop of 9% in gold production “due to the impact of lower grades and the increase in processing hard rock together with inflationary cost pressures across all sites.” As a result extraction costs jumped 16% year-over-year to $787/ounce. Compare that to Barrick Gold Corporation (USA) (NYSE:ABX)’s $561/ounce extraction cost during that same period.

While IAMGOLD Corp (USA) (NYSE:IAG) touts exploration projects the recent quarterly report is ripe with desperate cost cutting measures such as hiring freezes, curtailing executive privileges, and discussions with suppliers to reduce costs.

With gold trading lower and costs to extract that gold rising, look for things to get much worse for IAMGOLD Corp (USA) (NYSE:IAG) before they get any better.

Conclusion

Some of the most predictable stocks are those with transparent pricing. Investors can keep track of their investments by looking at the prices received for commodities those companies exploit. When macroeconomic fundamentals suggest a continuing path and the market seems to agree it is futile to fight the trend.

The article Are Dark Days Still Ahead for These Miners? originally appeared on Fool.com and is written by James Catlin.

James Catlin has no position in any stocks mentioned. The Motley Fool owns shares of Freeport-McMoRan Copper & Gold. James is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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