Goldcorp Inc. (USA) (GG), Newmont Mining Corp (NEM): Is Barrick Gold Corporation (USA) (ABX) Destined for Greatness?

High cost overhangs have hindered the entire gold-mining industry. Barrick Gold Corporation (USA) (NYSE:ABX)’s rival Newmont Mining Corp (NYSE:NEM) has been aggressively slashing staff headcounts in Australia, largely due to the drastic increase in wages across the region. Newmont Mining Corp (NYSE:NEM) also wrote down $1.61 billion on its Hope Bay mine in Canada, and the writedowns are expected to continue with falling gold prices and rising superfluous costs. Fool contributor Matt DiLallo notes that Goldcorp Inc. (USA) (NYSE:GG) recently marked a $2 billion impairment charge on its Penasquito mine, and has also significantly cut its capital expenditures. However, there is good news for gold mining investors, as the rising demand of gold from both India and China could help buoy the metal’s price, particularly if panicked Indian investors turn to gold as an inflation hedge. According to the World Gold Council, the consumer demand of gold in the Indian markets could outpace 1,000 tons this year.

High costs aren’t the only obstacle to Barrick’s profitability — the Chilean government recently imposed a $15.8 million fine on Barrick for environmental violations in the Pascua-Lama mine. The company has been forced to shut down that operation, which has had a massive impact on the company’s finances, as Pascua-Lama accounts for 11% of Barrick’s total gold production. My fellow Fool Marie Palumbo notes that Barrick will submit a new water management plan to the Chilean government, which could soon reverse the company’s fortunes.

Putting the pieces together
Today, Barrick has few of the qualities that make up a great stock, but no stock is truly perfect. Digging deeper can help you uncover the answers you need to make a great buy — or to stay away from a stock that’s going nowhere.

The article Is Barrick Gold Destined for Greatness? originally appeared on Fool.com and is written by Alex Planes.

Fool contributor Alex Planes has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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