🕐06.03.14 - 08:27 Uhr

INVESTEC: AFRICAN BARRICK GOLD : DELIVERING WELL...BUT UPSIDE WELL PRICED IN - SELL




African Barrick Gold (Price: 281p | Target: 132p | Rec: Sell) African Barrick’s recent financial results highlight the admirable efforts it has made in optimising operations and reducing costs.

This makes future growth easier to envisage and to this end we have incorporated two of the company’s growth projects: Bulyanhulu Upper East and North Mara.

While this has resulted in a considerable lift in our target price, the market has already factored in upside well beyond this.

Given our current gold price assumptions, we therefore retain a Sell recommendation. * Given the good progress now being made across the group, with a recent history of deliverability, we have incorporated two of the company’s growth options, Bulyanhulu Upper East and North Mara underground, into our forward assumptions.

While neither of these has yet been approved by the Board, considerable ground work has already been undertaken and the parameters are therefore relatively well known. * These additional projects have the effect of lifting our forecast production profile in the medium term by c.100koz/pa, and increasing longer-term production to over 700koz/pa on a sustained basis, at cash costs of c.US$740/oz.

Our forward EPS estimates are up 22% in FY14E, 27% in FY15E and 38% in FY16E. * We increase our target price, based on an equal blend of NPV ($1,300/oz gold price and 8% discount rate) and forward multiples, to 206p per share (previously 132p).

Given the company’s considerable share price appreciation since June 2013, well ahead of that of its peer group, we retain our Sell rating.

Applying a flat $1,400/oz gold price, approximately $50/oz above the current spot price, would derive a target price in line with the current share price and this highlights the key commodity risk to our recommendation.

Other risks include increased government tax grabs and ongoing project delivery.
To access the full note please click here Analyst: Hunter Hillcoat +44 (0)20 7597 5182
To UNSUBSCRIBE from this email and/or to change your mailing list preferences, please email .
IMPORTANT NOTICE: This communication forms part of an electronic communication sent to the intended recipient (or such persons authorised representative) for their sole use and is subject to important legal and regulatory restrictions, qualifications and disclaimers that may be accessed and read in the attached research publication.

If you cannot access the disclaimer, please obtain a copy thereof from us by sending an e-mail to in the case of SA or in the case of the UK or Australia: The disclaimer is deemed to form part of this communication.

In the event of a conflict between the disclaimer and this notice, the disclaimer shall take precedence.

This communication is confidential for the information of the addressee only (and may not be reproduced in whole or in part, copies circulated, or disclosed to another party, unless permitted pursuant to and in accordance with the disclaimer. If you are not the intended recipient of this e-mail, then: (a) please notify the sender of this e-mail immediately by return e-mail, facsimile or telephone and delete this message from your system; (b) you may not print, store, forward or copy this message or any part thereof or disclose or cause information in this message to be disclosed to any other person. Nothing in this message constitutes an offer, warranty or representation from us.

None of our employees or representatives are permitted to send unsolicited messages ("spam") and our company cannot be held liable therefore.

If you regard this message as spam, please inform us immediately by sending an e-mail to in the case of SA or in the case of the UK or Australia: Unless otherwise agreed: (a) We are only deemed to have received an e-mail once we have confirmed receipt thereof to you; (b) We are deemed to have sent an e-mail once reflected as “sent” on our e-mail server. If this message contains offensive, derogatory or defamatory statements or materials, it means the message has been sent outside the sender’s scope of employment with us and only the sender can be held liable in his/her personal capacity.

Our corporate information and names of our office bearers can be accessed by sending an e-mail to in the case of SA or in the case of the UK or Australia: The disclaimer applies to our original message, any attachments and all subsequent messages or attachments we may send.
_____________________________________________________________________ Investec Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales (No.

489604).

Registered office at 2 Gresham St, London EC2V 7QP. Investec Asset Finance Plc is a subsidiary of Investec Bank plc.

Registered in England and Wales (No.

2179313).

Registered office at Reading International Business Park, Reading RG2 6AA. We may monitor e-mail traffic data and the content of email.

Calls may be monitored and recorded. This email and any files transmitted with it are confidential and intended solely for the use of the individual or entity to whom they are addressed.

If you have received this email in error please notify the sender.

This e-mail is subject to terms available at the following link: www.investec.co.uk/emaildisclaimer.

By communicating electronically with us, you consent to these terms. _____________________________________________________________________ _____________________________________________________________________ This email has been scanned by the Symantec Email Security.cloud service. For more information please visit http://www.symanteccloud.com Private & Confidential / Disclaimer: This document is private and confidential and remains the property of Bell Pottinger.

Its contents may not be copied, forwarded or duplicated in any form or by any means without the permission of Bell Pottinger.

Bell Pottinger is made up of Bell Pottinger Private Limited, a limited company registered in England & Wales with registered number 08024999 and Bell Pottinger LLP, a limited liability partnership registered in England & Wales with registered number OC380478, together with their subsidiaries.

Our registered office is at 6th Floor, Holborn Gate, London WC1V 7QD.

A list of the members of Bell Pottinger LLP is open for inspection at our registered office.






Products & Services | Jobs