Barrick Mining's High-Stakes Quarter: Margins and a Spin-Off in the Spotlight

Barrick Mining faces a profit squeeze from rising costs despite record gold prices. New CEO Mark Hill's strategy, including a major asset spin-off, will be tested in the Q1 report.

With gold trading above $4,850 an ounce, Barrick Mining is navigating a golden era defined by both immense profitability and mounting internal pressures. The company’s upcoming first-quarter report on May 11 will serve as a critical test for new CEO Mark Hill, revealing whether operational costs are undermining the windfall from record metal prices.

The miner’s current margins are staggering, estimated at nearly 70 percent. For every ounce of gold produced, Barrick earns roughly $3,000. This favorable environment is driven by sustained central bank purchases and geopolitical tensions, with a recent ten-day ceasefire between Israel and Lebanon helping to keep the Strait of Hormuz open and temporarily easing oil prices. Yet this external support contrasts sharply with internal cost pressures that threaten to narrow the profit gap.

The Cost Conundrum

The core challenge for management is not production but rising expenses. All-in Sustaining Costs climbed 10 percent in 2025 to $1,637 per ounce. For 2026, the company anticipates a further increase to between $1,760 and $1,950, fueled by lower ore grades, pricier supplies, and adjusted gold price assumptions. The first quarter is expected to be the year’s weakest period, with gold and copper output not yet at full capacity. Significant volume increases from ramp-ups at Loulo-Gounkoto, Goldrush, and Pueblo Viejo are not anticipated until the second half of the year.

Barrick’s full-year production guidance remains at 2.9 to 3.25 million ounces of gold, with a 45/55 split between the first and second halves. Despite the Q1 headwinds, the company’s operational foundation is robust. In 2025, it generated $7.7 billion in operating cash flow, while free cash flow tripled to $3.9 billion.

A Strategic Pivot and Shareholder Rewards

This financial strength has enabled a new capital returns framework. The board has introduced a policy to return 50 percent of attributable free cash flow to shareholders, raising the quarterly dividend to 17.5 cents. An existing share buyback program will not be extended, as the company pursues a more transformative strategic move.

All eyes are now on the planned initial public offering of Barrick’s North American assets, a new entity referred to internally as NewCo. Targeted for late 2026, the spin-off would see an initial free float of 10 to 15 percent. This portfolio bundles 64 percent of Barrick’s current gold production. CEO Mark Hill believes the standalone company will compete in its own league, aiming to unlock hidden value and reduce the typical conglomerate discount applied to diversified miners.

The North American operations, particularly the Carlin mine where production jumped 25 percent last quarter, provide a stable platform for this ambitious corporate overhaul. The company confirms its annual gold and copper production targets, supported by an expected 37 percent rise in operating earnings and a 42 percent surge in operating cash flow. A legal dispute with rival Newmont has not hampered output at key sites.

Analysts are watching closely. Raymond James recently lowered its price target but maintained an "Outperform" rating, citing price adjustments and expected Q1 production corrections. The virtual Annual General Meeting on May 8, just three days before the earnings release, will set the stage. When Mark Hill presents results at 6 a.m. New York time on May 11, investors will learn if soaring costs have been contained and if the path to the NewCo IPO remains clear.