The first-quarter earnings season, which kicks off for the senior gold miners later this week, is traditionally the sector’s weakest quarter of the year, and 2015 should be no different.
Analysts at TD Securities expect the seniors to report an overall 10-per-cent drop in gold production compared to the fourth quarter. That will lead to a small increase in cash costs, which will offset the benefit from a slightly higher gold price (which rose 1.5 per cent in the quarter). Margins are expected to be flat, though producers outside the U.S. will benefit from the recent strength of the greenback.
Goldcorp Inc. has already reported a 19-per-cent drop in production, which analysts think will be the biggest decline in the sector. Agnico-Eagle Mines Ltd. is expected to have flat production, which is the strongest forecast they have for any of the seniors.
Positively, they think that the rest of the year will be much stronger than Q1, with cumulative production from the seniors rising 1.7 per cent in 2015.
In the case of Barrick Gold Corp., TD analyst Greg Barnes cut his earnings per share forecast from US25 cents to eight cents. That reflects weaker-than-expected gold prices as well as lower production (and higher operating costs) at three of the miner’s key operations: Pueblo Viejo, Cortez and Goldstrike.
Mr. Barnes expects limited free cash flow of just US$45 million for the quarter, though he sees this as Barrick’s low point of the year.
