start here

start here

The Daily IKN email digest, get all daily posts sent to you next day (& no ads)

I say things on Twitter


So I'm sitting here, thinking about Barrick's (ABX) balance sheet...

...and once you dial up the latest financials, you see that:

Total assets are $49Bn
Total liabilities are $23.8Bn

Which isn't so bad (and working cap at ~$3Bn is the type of number that a company without immediate cash crunch problems has). But then you start wondering, "hmmm...wonder how much of those assets needs to be written off?" and once you consider what the company said in its latest release, there's perhaps $5Bn of the Pascua Lama asset (booked at $6.5Bn today) that's about to go. Then ABX still has $1.8Bn booked for the never-gonna-happen Cerro Casale in Chile. Add to that the $115Bnm for Donlin (hahahaha) and what we're really looking at here is a total assets (even before it writes down any of the goodwill) of $42Bn, not 49.

So, BV of $18Bn? Yep, I'd go for that right now. And oh look, it's running a market cap of $14Bn, as of this morning. A P/BV of 1.3X 0.77X* is:

a) the mark of a dysfunctional company (natch)
b) the kind of price that might make it interesting as a takeover.

So as I floated the thought in April, let's do so again now that ABX is another 1/3 cheaper: Would Goldcorp (GG) take a run at ABX at these prices? If it did it could scrap the idiot corporate culture running the decent assets (it still has those), it could scrap Pascua Lama once and for all, it would add value all round.

PS: I only post these things to have wonky mail exchanges with certain people the next day, so don't read too much into it or start thinking that I'm trying to get a posse together to go shake up the town.

UPDATE: About that * above, yes yes i'm a dumbass and flipped the numbers over, as (smarter than I) reader TC kindly pointed out. TY dude. The argument doesn't change, though.