By Julie Gordon
TORONTO Nov 7 Goldcorp Inc briefly
surpassed Barrick Gold Corp to become the world's
biggest gold miner by market capitalization this week, even
though Barrick owns more mines and produces far more gold than
its growth-focused peer.
Barrick battled back late on Wednesday to land slightly
Goldcorp has been creeping up on Barrick for years, but this
week was the first time the smaller producer surpassed the
longtime top dog, which is under pressure due to delays and
rising costs at its massive Pascua-Lama gold and silver project
on the border between Chile and Argentina.
"It's not necessarily that Goldcorp is doing so well, it's
just that Barrick is doing so poorly," said John Ing, president
and mining analyst at Maison Placements Canada in Toronto.
Pascua-Lama, which is now expected to cost up to $8.5
billion to build, will be the most expensive gold mine ever
constructed, he said.
"That, together with disappointing earnings reflecting a
narrowing of margins, really deflated enthusiasm for the world's
so-called leader among the gold miners," Ing said.
Barrick stock has fallen nearly 23 percent since the
beginning of 2012, while Goldcorp stock has been buoyed by
better-than-expected third-quarter earnings. Goldcorp is down
3.1 percent this year.
Goldcorp's market cap was C$35.32 billion (US$35.47 billion)
at the close on Tuesday, while Barrick's market cap stood at
C$35.30 billion. Barrick climbed back to C$36.18 billion on
Wednesday at the close, while Goldcorp stood at C$36.08 billion.
While Goldcorp lags Barrick in output - it plans to produce
just 2.35 million to 2.45 million ounces this year compared with
Barrick's 7.3 million to 7.5 million ounces - the
Vancouver-based miner has a strong growth profile.
"Goldcorp is in the sweet-spot of what investors are looking
for, it's kinda like a Goldilocks," said Joung Park, a mining
analyst at Morningstar.
"It's big, so it's a little more stable than some of the
junior miners, but it still has the growth profile of a junior
or mid-tier miner."
Goldcorp's newest mine, the Pueblo Viejo joint venture with
Barrick in the Dominican Republic, is set for commercial
production by the end of this year. Goldcorp plans to bring
three more major projects into production through 2014, which
will substantially increase its annual output.
Toronto-based Barrick, by comparison, plans a modest boost
in output to 8 million ounces a year by 2016.
"Despite the fact that Barrick is spending billions
constructing mega-gold projects, we believe they will have
trouble achieving net growth," said Adam Graf, a mining analyst
with Dahlman Rose in New York.
"They have a much larger production base to build from, so
on a percentage basis, it's a bigger challenge to grow. Also,
Barrick has many older mines that are coming to the end of their
natural lives, or are fighting lower ore grades to stay
That means ounces from Barrick's new mines will go towards
replacing those being lost at older projects.
Of 24 analysts surveyed by Thomson Reuters I/B/E/S, 18 rank
Goldcorp as a "Buy" or "Strong Buy", with five "Holds" and one
Out of a total of 29 analysts, Barrick has 16 "Buy" or
"Strong Buy" rankings, with 12 "Holds" and one "Underperform."
Barrick, which fired Chief Executive Aaron Regent in June
amid disappointment with the performance of the shares, has a
stake in some 22 producing gold mines around the world.
Goldcorp, by contrast, holds a stake in 12 producing mines
across the Americas.
Barrick's shares closed up 2.47 percent at C$36.15 on
Wednesday on the Toronto Stock Exchange, while Goldcorp's closed
up 1.76 percent at C$44.51.