Barrick Gold Grapples with Soaring Costs Despite Record Gold Prices

Barrick Gold faces rising costs and project delays despite high gold prices. It plans a multi-billion dollar North American asset IPO to unlock value and reduce geopolitical risk.

Even as gold trades near historic highs, Barrick Gold Corporation is confronting a significant profitability squeeze. The mining giant faces mounting operational expenses, project delays, and geopolitical headwinds, which are eroding its margins. In a strategic countermove, the company is advancing plans for a multi-billion dollar initial public offering (IPO) designed to unlock shareholder value.

Operational Hurdles and a Strategic Pivot

The central challenge for Barrick is sharply rising production costs. The company's projected All-in Sustaining Costs (AISC) for 2026 are estimated to range between $1,760 and $1,950 per ounce. A primary driver is the surge in diesel prices, exacerbated by prolonged volatility in energy markets linked to disruptions in the Strait of Hormuz. Consequently, a substantial portion of the benefit from higher gold prices is being absorbed before the metal even leaves the ground. This pressure has prompted a broader industry shift, with Barrick and its peers prioritizing stringent cost control over aggressive expansion.

A North American Spin-Off to Mitigate Risk

In response to these international complexities, Barrick is undertaking a major corporate restructuring. The firm has enlisted Goldman Sachs to guide the public listing of its North American assets. This new entity, referred to internally as "NewCo," would consolidate Tier-1 mining operations in the United States and the Dominican Republic. Preliminary valuations suggest the spin-off could be worth over $60 billion. Veteran dealmaker Michael Klein is also advising on the transaction.

The rationale is clear: by separating its stable North American portfolio from assets in more politically uncertain regions, Barrick aims to offer investors a pure-play opportunity with reduced geopolitical exposure.

Diverging Fortunes at Key Projects

On the ground, operational performance is mixed. The Loulo-Gounkoto complex in Mali, which Barrick regained control of in late 2025, is expected to produce between 260,000 and 290,000 ounces in 2026. This output is seen as a crucial contributor to the year's anticipated free cash flow.

In stark contrast, progress at the Reko Diq copper-gold project in Pakistan has stalled. Citing elevated security risks in the region, Barrick has extended its comprehensive project review until mid-2027. This delay is anticipated to materially increase the already-communicated capital budget, though revised figures have not yet been disclosed.

Market Performance and Investor Sentiment

Barrick's share price currently trades approximately 17% above its 200-day moving average. However, it has relinquished nearly one-fifth of its value since hitting a 52-week high in January. The success of the proposed IPO in restoring full investor confidence is likely to hinge on the company's ability to demonstrate tangible progress in curbing its escalating cost structure.