Barrick Gold Corporation

Kasper Ryttersø Harboe Jensen

Student thesis: Diploma thesis

Abstract

The purpose of this report is to find the fair value of Barrick Gold and the stock price, after they announced the 2017 annual result. Furthermore, compare that to the actual price on the stock market. The report will be devided intro three phases; strategic analysis, financial analysis and valuation. The strategic analysis contains both an external and internal perspective, by analysing the market of gold mining and the strategic position of Barrick Gold. The external part contains a PEST analysis and the model of Ports Five Forces. The internal part is made from a SWOT analysis. The strategic analysis and financial analysis provide the basis for the final budgeting. The valuation of Barrick Gold will be completed by use of the DCF- and RIDO-model. The external analysis shows, that the market of gold mining is politically regulated, affected by the interest rate, dependent of the local communities and the technological development. The gold mining market has high access barriers and will not be threatened by new competitors, and the market is characterized by low rivalry. It is a weakness for Barrick Gold to have narrow business model and a high debt ratio. On the other hand, it is a strength for Barrick Gold to be using new and advanced technology, and their focus on the local community is a strength as well – and in that way exploit the opportunities in the market and be aware of the threats. The financial analysis has been based on the financial results of Barrick Gold for the years 2014- 2017. The period was a turning point for Barrick Gold. They have gone from negative annual result to positive. They have managed this by reducing costs and by selling some of their shares in 2 big goldmines. Based on the strategic and financial analysis the budget assumption has made the valuation possible. The conclusion is that the fair value stock price for Barrick Gold is 50,17 USD, therefore I recommend to buy the stock.

EducationsGraduate Diploma in Finance, (Diploma Programme) Final Thesis
LanguageDanish
Publication date2018
Number of pages70