Mackie Research Cuts Barrick Gold to "hold," Iamgold to "sell"

Mackie Research has revised ratings on gold producers Barrick Gold Corporation (USA)

and IAMGOLD Corp

. Analyst Barry Allan has downgraded Barrick Gold to "hold" from "buy" on increasing share price and said the market has recognized improvements in underlying performance. Since the third quarter of 2015, the share price of ABX has performed nicely, rising off all-time lows and rising more than 100 percent. "While our NAV increases from C$14.08 to C$15.80 driven by lower debt and increased reserves, unfortunately we are taking our recommendation from BUY to HOLD as a result of good performance of the share price. Without higher gold prices, our target only rises to $16 from $14, reflecting the increase in NAV," Allan said in a note to clients. For 2015, Barrick's production totaled 6.12 million ounces (Moz) at direct operating costs of US$596/oz, largely due to excellent operating performance at Goldstrike and Cortez mines. For 2016, after asset sales, the analyst forecast gold production of 5.4 Moz at a direct cost of US$544/oz, generating operating cash flow of about US$2.1 billion. Allan also cut the rating on Iamgold to "sell" from "hold," citing distinct lack of excitement in fundamentals. The analyst said: "Due to a rise in the share price, we are changing our recommendation to SELL from HOLD and fail to see any reason to own the equity. With a flat to declining production profile for 2016 and 2017, and a relatively high, all-in cost of ~US$1,200, other than the potential for higher gold prices, there is no fundamental reason to be involved with the stock." The 2015 production at Iamgold came in at 806 thousand ounces at a cost of US$835/oz. The company is working hard just to maintain production and an acceptable all-in operating cost.