美股金属与采矿业2018q3盈利预览

Metals&MiningMetalsandFahadTariq,CPA,416352MarkLlanes,CPA,416352Q3/18EarningsTheNorthAmericanMetals&MiningMetalsandFahadTariq,CPA,416352MarkLlanes,CPA,416352Q3/18EarningsTheNorthAmericanmetalsandmininguniversebeginsreportingthirdearningsonafter-market.Oursectorpreviewincludesearningscalendar,CSfinancialandoperationalestimatesvs.consensus,andindividualCompanyoutlooks.Wealsoprovidemacrothoughtsupfrontandabriefstateoftheindustry.■WearebelowconsensusforQ3,thoughconsensusisstillbeingestablished:OurQ3estimateshavedeclinedacrosstheboardaswepushthroughalowercommoditypricedecktoreflecthowgoldpricestrendedinthequarter(~5%dropfromUS$1,248/ozatQ2-endtoUS$1,192/ozatQ3-end).WenotethatthegoldpricebouncehappenedafterQ3-endsowewillseetheimpactofthatinQ4earnings.Companiesinourcoveragegenerallyappeartobetrackingatthelowerendoffullyearproductionguidance(Figure6)fordifferentreasons,withAEMthenotableexception.Wewouldn’tbesurprisedtoseesomenegativeguidancerevisionsaspartofQ3Figure1:CSVariancevs.ConsensusQ3/18 Source:Companydata,CreditSuisse■TPrevisions:WehaverevisedTPformostofourcoverageuniverse,largelydrivenbyarefreshofourcommodityprices.OurTPforAEMisnowUS$55.00(fromUS$58.00),ABXisnowUS$14.50(fromUS$18.00),GGisisnowUS$48.00(fromUS$50.00),IAGisnowUS$5.50(fromUS$7.00),AUYisnowUS$3.50(fromUS$4.25),FNVisnowUS$75.00(fromUS$80.00),WPMisnowC$30.00(fromC$31.00),HBMhasbeenmaintainedatC$8.50,andLUNisnowC$9.25(fromC$10.00).EPSrevisions:EPShasbeenrevisedthroughoutourcoverageuniverseapproximately10-20%duetomodelrevisionsandcommoditypriceforecastrefresh.Operationsandcommoditypricesarekeyrisks.■DISCLOSUREAPPENDIXATTHEBACKOFTHISREPORTCONTAINSIMPORTANTDISCLOSURES,ANALYSTCERTIFICATIONS,LEGALENTITYDISCLOSUREANDTHESTATUSOFNON-USANALYSTS.USDisclosure:Creditasonlyasinglefactorinmakingtheirinvestmentdecision.PRERESULTS每日每日免费获取报（增值服务关注回复：研究加入“起点财经”微信群18October18October2Metalsand18OctoberGoldonthe■Takingastepback,goldstocksappearoversoldYTD(evenwithrecentoutperformance):Wehighlightthatgoldstocksinourcoverageuniversearedown~20%onaveragesofarthisyear,withgolddown~6%YTD.Thisdeltasuggeststousalookingmoreattractive.Lookingatthemacro–upsidebiasforgold:Ahostoftechnicalandfundamentalfactorspointtoapotentialgoldpricerebound,includingsignsofpeakUSD,realbondyieldspotentiallytoppingout,speculatorsareunusuallyshortgold,andgoldisseenasasafehavenamidtherecentvolatilityinequities.Ifthereiscontinuedmarketturbulence(duetotighteningmonetarypolicy,slowingglobalgrowth,tradewarconcerns,EUinstability,etc.),wewouldexpectgold/goldequitiestooutperformasinvestorsflocktothecommodityasasafehaven.Industryrightlyfocusedonmargins/FCF:Aconsistentthemeatthisyear’sDenverGoldForumwasafocusonimprovingmarginsandFCFratherthanchasingexpensiveounces,whichinrecenthistoryhashurtshareperformanceeveninaflattishgoldpriceenvironment.Wethinkthisisapositive18OctoberGoldonthe■Takingastepback,goldstocksappearoversoldYTD(evenwithrecentoutperformance):Wehighlightthatgoldstocksinourcoverageuniversearedown~20%onaveragesofarthisyear,withgolddown~6%YTD.Thisdeltasuggeststousalookingmoreattractive.Lookingatthemacro–upsidebiasforgold:Ahostoftechnicalandfundamentalfactorspointtoapotentialgoldpricerebound,includingsignsofpeakUSD,realbondyieldspotentiallytoppingout,speculatorsareunusuallyshortgold,andgoldisseenasasafehavenamidtherecentvolatilityinequities.Ifthereiscontinuedmarketturbulence(duetotighteningmonetarypolicy,slowingglobalgrowth,tradewarconcerns,EUinstability,etc.),wewouldexpectgold/goldequitiestooutperformasinvestorsflocktothecommodityasasafehaven.Industryrightlyfocusedonmargins/FCF:Aconsistentthemeatthisyear’sDenverGoldForumwasafocusonimprovingmarginsandFCFratherthanchasingexpensiveounces,whichinrecenthistoryhashurtshareperformanceeveninaflattishgoldpriceenvironment.Wethinkthisisapositivedevelopmentandbetterpositionscompaniesforwhengoldpricesturn.Wecontinuetolikecompanieswithstrongproductionpipelineslargelybasedonexistingoperationsandwithadvantagedcosts.GoldcompanieswithalongerminelifehavegenerallyperformedbetterYTD(Figure2).Weidentifyourtoppicksbelow.■■Figure2:YTDPerformancevs.EstimatedReserve ----------86420AvgReserveReserveSource:Companydata,CreditSuisseMetalpricesfellq/q,butgoldimproving:InQ3,goldpricesfellfromUS$1,248/ozatQ2-endtoUS$1,192/ozatQ3-end,a~5%drop.Copperpricesalsodeclined~5%q/q,fromUS$2.95/lbatQ2-endtoUS$2.79/lbatQ3-end.Zincpricesfellfrom~US1.40/lbatQ2-endtoUS$1.10/lbatQ3-end,a~21%drop.Weremainmoreoptimisticaboutgoldpricesthanbasemetalsasgoldlookstoberecoveringfromrecenttroughlevels–pricesarenowhoveringUS$1,220-1,230/ozfollowingtherecentequitiesvolatilityandflowstogoldasasafehaven.WithcopperthereisariskofsubduedChineseindustrialdemandandforzinc,potentialoversupply(“NewZinc&Coaloutlook”(Catalano,Set.al).Wedon’tseethesesamefundamentalrisksingold.3MetalsandYTDReserveLife18OctoberToppicks:OurtoppicksremainAEMandGGaswecontinuetoprefercompanieswithstrongproductiongrowthprofiles.OtherOutperform-ratedgoldnamesareNEMandAUY,andWPMamongroyaltycompanies.OurFigure3:Our Source:Companydata,CreditSuisseestimates,Note:FirstQuantumResourcesandTurquoiseHillResourcesarecoveredbyCurtWoodworth,andNEXAResourcesiscoveredbyIvanoWestinandarenotincludedinthispreview.FinancialEstimatesvs.ConsensusandCallFigure4:EPS,CFPS,andEBITDACSEstimatesvs.ConsensusforQ3/18andCall Source:Companydata,CreditSuisseestimates,the18OctoberToppicks:OurtoppicksremainAEMandGGaswecontinuetoprefercompanieswithstrongproductiongrowthprofiles.OtherOutperform-ratedgoldnamesareNEMandAUY,andWPMamongroyaltycompanies.OurFigure3:Our Source:Companydata,CreditSuisseestimates,Note:FirstQuantumResourcesandTurquoiseHillResourcesarecoveredbyCurtWoodworth,andNEXAResourcesiscoveredbyIvanoWestinandarenotincludedinthispreview.FinancialEstimatesvs.ConsensusandCallFigure4:EPS,CFPS,andEBITDACSEstimatesvs.ConsensusforQ3/18andCall Source:Companydata,CreditSuisseestimates,theBLOOMBERGPROFESSIONAL™service,ThomsonReuters4Metalsand EPS CS CFPS CS EBITDAQ3CS CallDate Metals&Mining US$0.39 After 8:00AMESTNA:1-800-319-Int'l:416-915- US$0.19 After 8:00AMESTNA:1-877-648-Int'l:1-617-826-AgnicoEagle (US$0.05)US$0.55 After NA:1-888-231- Int'l:1-647-427- US$0.31 After NA:1-800-355- Int'l:416-340-Newmont US$0.82 Before NA:1-855-209- Int'l:412-317-Yamana US$0.10 After 9:00AMESTNA:1-866-223-Int'l:416-340- US$0.34 After NA:1-800-530- Int'l:416-849- US$0.59 After 8:00AMESTNA:1-888-390-Int'l:1-416-764- US$0.17 After 8:30AMESTNA:1-800-319-Int'l:1-604-638- US$0.12 After 8:00AMESTNA:1-877-201-Int'l:1-647-788-Wheaton US$0.25 After NA:1-888-231- Int'l:1-647-427-Wednesday,October17,CS5252P/NAV(onCSmetalsRt.to1-12-1-1-2-1-PreciousMetals Largecap All RoyaltyWheatonPrecious C$22.86 C$20.15 BaseMetalsTurquoiseHillC$13.58 C$6.16 C$5.81 C$2.43 (13%) (10%) C$13.58 Basemetals *OP=Outperform,N=Neutral,UP=18OctoberCommodityPriceWehaveupdatedourneartermcommoditypriceforecastbasedontheforwardcurveforgoldandsilver.Wehavealsorevisedouroutlookforzincfortherestof2018and2019.Figure5:CreditSuisseCommodityPrice Source:Companydata,CreditSuisse5MetalsandCommodityPriceSpot(Oct. Gold Change(%)CreditSuissevs.18OctoberCommodityPriceWehaveupdatedourneartermcommoditypriceforecastbasedontheforwardcurveforgoldandsilver.Wehavealsorevisedouroutlookforzincfortherestof2018and2019.Figure5:CreditSuisseCommodityPrice Source:Companydata,CreditSuisse5MetalsandCommodityPriceSpot(Oct. Gold Change(%)CreditSuissevs.forward---CreditSuissevs.-Silver Change(%)CreditSuissevs.forward---CreditSuissevs.-Copper ForwardCreditSuissevsforward--CreditSuissevs-Zinc Change(%)CreditSuissevsforward----CreditSuissevs-OperationalEstimatesforQ3/18andFigure6:OperationalEstimatesforQ3/18and PreciousMetalsAgnicoBarrick IAMGold Newmont RoyaltyFranco-WheatonPrecious BaseMetals $1,400- OperationalEstimatesforQ3/18andFigure6:OperationalEstimatesforQ3/18and PreciousMetalsAgnicoBarrick IAMGold Newmont RoyaltyFranco-WheatonPrecious BaseMetals $1,400- NotNot Source:Companydata,CreditSuisseNEMincludesUS$225-275MinitscapexguidancethatrelatestotheTanamipowerprojecttobepaidovera10yeartermbeginningin2019.OurCSestimatesincludeexpendituresrelatedto2018only.AUYprovidessustainingcapexguidanceofUS$170M,growthofUS$192M,andexplorationofUS$89M(70%capitalizedinadditiontosustaining)anddoesnotincludeGualcamayocapexguidanceofUS$14.8M.RefertocompanyspecificnotesforappropriatecostGuidanceprovideddoesnotincludeGualcamayoorBrio.ConsensuslikelyincludesproductionfromBrioand18October6Metalsand Totalcapex CS AISC(US$/oz)/CashCost Q3/18CS$890- $765- $760- $990- $926- $965- $850- Production CS consensusQ3/18 4,500- 2,375- 2,375- 4,900- 440- 122.5- 162- 850- 18October18OctoberCompany7Metalsand18OctoberPreciousAgnicoEagleMinesLimitedTargetprice(US$)(from58.00)Q3/18Preview:Expectinganotherguidancebump,DecreaseTPtoUS$55.0052-weekpricerange -32.59Marketcap(US$Enterprisevalue(US$ 18OctoberPreciousAgnicoEagleMinesLimitedTargetprice(US$)(from58.00)Q3/18Preview:Expectinganotherguidancebump,DecreaseTPtoUS$55.0052-weekpricerange -32.59Marketcap(US$Enterprisevalue(US$ AEMtoreportQ3/18earningsonOct.24thafter-market,conferencecalltobeheldonOct.25that11:00AMEST(1-888-231-8191).DecreasingTPtoUS$55.00fromUS$58.00,maintainOutperformrating:Wehaverevisedournear-termgoldpriceforecastbasedontheforwardcurveforQ4/18(US$1,228/oz)and2019(US$1,252/oz),thoughwemaintainourLTforecastofUS$1,300/oz.Wemadeseveralfine-tuningadjustmentsincludingreviewingcostsacrossAEM’sassets.OurTPisbasedona50/50weightingofourNAVPSofUS$30.31usinga2.1xmultiple(downfromUS$31.46)andourFY19OpCFaofUS$1.88usinga22.0xmultiple(downfromUS$2.37),bothdrivenlargelybytheupdatedgoldpriceforecast.AgnicohistoricallyraisesguidanceinQ3:AEMhasraiseditsguidanceforthepastthreeyearsinQ3andweexpectthesamethistimearound,particularlyaswemodelthecompanyachieving1,593kozsofgoldproductionin2018vs.currentguidanceof1,580kozs.CSbelowconsensusforQ3/18:CSisforecastingEPSofUS$(0.05),belowUS$(0.01)consensus,drivenprimarilybycommoditypriceMTMandacatchuponexploration.WeforecastCFPSofUS$0.55belowUS$0.67consensusandEBITDAofUS$145M,belowUS$167Mconsensus.Wecurrentlyforecast390kozsinthequarter,downfrom405kozsinQ2/18,largelyduetoadeclineinproductionestimatesatLapa.WeestimatecashcostsofUS$628/ozandAISCofUS$860/oz.Wecurrentlyestimate2018cashcostsofUS$635/ozandAISCofUS$874/oz.Weareonthelowerend/belowAEM’sguidancerangeofUS$625-675/ozandUS$890-940/oz,largelyduetoFX,abovemid-pointproductionexpectations,andlikelycapexdeferrals.Revise2018EPStoUS$0.17fromUS$0.49largelyduecommoditypriceMTMandahighereffectivetaxrate.Commoditypricesandoperationsrisksarekeyriskstoourview.■FahadTariq,CPA,416352MarkLlanes,CPA,416352■■■■Shareprice FinancialandvaluationEPS(CSadj.)Prev.EPS(US$)P/Erel.(%)EBITDA(US$m)OCFPS(US$)P/OCF(x) EV/EBITDAOn17-Oct-2018theS&P500INDEXclosedat Netdebt(US$ROICDailyOct18,2017-Oct17,2018,10/18/17=Quarterly Q4NumberofsharesEV/IC(x) 0.30BV/share(NextQtr., 0.01-0.050.06Netdebt(NextQtr.,US$ Netdebt/toteq(NextSource:Companydata,ThomsonReuters,CreditSuisse8Metalsand18OctoberAgnicoEagleMinesLimitedPrice(17Oct2018):US$36.8;Rating:OUTPERFORM;TargetPrice:(from58.00)55.00;Analyst:FahadAgnico-EagleMinesLimited(Agnico-Eagle)isaCanada-basedinternationalgoldproducerwithminingoperationsinnorthwesternQuebec,northernMexico,northernFinlandandNunavutandexplorationactivitiesinCanada,Europe,Latin Depr.&NetinterestBlue/GreySky----OtherNPAT600Changeinworking0Capex-00CashflowfromTotalcurrentBlueskyvaluationisbasedona10%highergoldpriceoutlookourbase TotalOurGreySkyScenario GreyskyvaluationisbasedonaUS$1,200spotgoldpricing1.0xP/NAV18OctoberAgnicoEagleMinesLimitedPrice(17Oct2018):US$36.8;Rating:OUTPERFORM;TargetPrice:(from58.00)55.00;Analyst:FahadAgnico-EagleMinesLimited(Agnico-Eagle)isaCanada-basedinternationalgoldproducerwithminingoperationsinnorthwesternQuebec,northernMexico,northernFinlandandNunavutandexplorationactivitiesinCanada,Europe,Latin Depr.&NetinterestBlue/GreySky----OtherNPAT600Changeinworking0Capex-00CashflowfromTotalcurrentBlueskyvaluationisbasedona10%highergoldpriceoutlookourbase TotalOurGreySkyScenario GreyskyvaluationisbasedonaUS$1,200spotgoldpricing1.0xP/NAV NetPer SharepriceNo.ofshares(wtdPrev.EPS-Freecashflowper SalesgrowthNetprofitgrowthEBITDAmarginPretaxmargin On17-Oct-2018theS&P500INDEXclosedat2809.21DailyOct18,2017-Oct17,2018,10/18/17=EV/SalesEV/EBITPricetobook ROEstated-returnon ----Source:Companydata,ThomsonReuters,CreditSuisse9Metalsand - Interestcoverageratio Asset P/E Netmargin EBITmargin EPSgrowth EBITgrowth CSadj. Totalliabilitiesand Totalcurrent Total OurBlueSkyScenario (from74.00)Cash&cash ChangesinNet Freecashflowtothe Capex- Cashfrom Net Adjustednet Cash Reportednetincome Profitafter PBT EBIT EBITDA(US$ Income 18OctoberOperatingandFinancialFigure7:OperatingandFinancial PriorRQ3/18EPQ3/18EPriorPriorPriorQ3/17AQ2/18AQ3/18E2018E2018E%Change2019E2019E%Change2020E2020E%GoldProduction––––––––––––––––Lapa/LaRonde––––––––––––La––––––––––––––––CashCosts Financial PriorRQ3/18EPQ3/18EPriorPriorPriorQ3/17AQ2/18AQ3/18E2018E2018E%Change2019E2019E%Change2020E%(15.2%)$2,284.6$2,292.3$2,477.8$2,786.9Depreciationand–––––––––––––––Total$2,021.6($18.1)Net($12.7)–––––Adjusted($0.05)($0.04)–––––––(251.8)FCFper($0.47)$239.7$234.2$1,233.2$121.4 $665.6Source:Companydata,CreditSuisseMetalsand 454.4405.0389.9 (3.7%)(14.2%)1,713.51,593.3 –1,759.6 –2,027.2 Freecashflow(before ($62.9)($130.1)($110.0)($186.8) 197.0%($106.6)($326.5) 43.0% (56.6%)$318.9 OpCFaper $0.48$0.20$0.61$0.26 (46.0%)$2.01$2.06$ (30.9%)$2.37$ (20.7%)$3.1318OctoberOperatingandFinancialFigure7:OperatingandFinancial PriorRQ3/18EPQ3/18EPriorPriorPriorQ3/17AQ2/18AQ3/18E2018E2018E%Change2019E2019E%Change2020E2020E%GoldProduction––––––––––––––––Lapa/LaRonde––––––––––––La––––––––––––––––CashCosts Financial PriorRQ3/18EPQ3/18EPriorPriorPriorQ3/17AQ2/18AQ3/18E2018E2018E%Change2019E2019E%Change2020E%(15.2%)$2,284.6$2,292.3$2,477.8$2,786.9Depreciationand–––––––––––––––Total$2,021.6($18.1)Net($12.7)–––––Adjusted($0.05)($0.04)–––––––(251.8)FCFper($0.47)$239.7$234.2$1,233.2$121.4 $665.6Source:Companydata,CreditSuisseMetalsand 454.4405.0389.9 (3.7%)(14.2%)1,713.51,593.3 –1,759.6 –2,027.2 Freecashflow(before ($62.9)($130.1)($110.0)($186.8) 197.0%($106.6)($326.5) 43.0% (56.6%)$318.9 OpCFaper $0.48$0.20$0.61$0.26 (46.0%)$2.01$2.06$ (30.9%)$2.37$ (20.7%)$3.13$ Adjustedoperatingcash $113.2$46.1$141.8$61.2 (46.0%)$467.6$481.0 (30.9%)$554.4 (20.7%)$732.7 $2.6$34.0($12.7)(137.4%)(593.8%)(117.9%)$238.3 (66.0%)$295.0 (32.5%)$318.7 Gold$1,282$1,375 $1,344 $1,346 $1,325 La talCash – 18OctoberPreciousBarrickGoldCorpTargetprice(US$)Marketcap(US$m)(from18.00)Q3/18Preview:MergerwithRandgoldtalkofthetownEnterprisevalue(US$ 18OctoberPreciousBarrickGoldCorpTargetprice(US$)Marketcap(US$m)(from18.00)Q3/18Preview:MergerwithRandgoldtalkofthetownEnterprisevalue(US$ ABXtoreportQ3/18resultsonOct.24thafter-market,conferencecalltobeheldonOct.25th,at8:00AMEST(1-800-319-4610):CSisforecastingQ3/18EPSofUS$0.04,belowUS$0.07consensus.TheCompanypre-releasedproductionandsalesonOct.10th.DecreasingTPtoUS$14.50fromUS$18.00,maintainNeutralrating:OurTPisbasedona50/50weightingofourNAVPSofUS$10.04usinga1.70xmultipleandourFY19OpCFaofUS$0.76usinga12.0xmultiple,bothdrivenbyourrevisedneartermgoldpriceforecastbasedontheforwardcurveforQ4/18(US$1,228/oz)and2019(US$1,252/oz),thoughwemaintainourLTforecastofUS$1,300/oz.Q3/18operationalrecap:TheCompanypre-releasedoperationaldataonOct.10th.ABXproduced1.15Mozsgoldandsold1.20Mozs.ABXproduced106Mlbsofcopperandsold114Mlbs.Barrickstatedcashcostsfell3-5%q/q(implyingUS$575-587/oz)andAISCfell7-9%q/q(implyingUS$779-796/oz).Coppercashcostswere7-9%lowerq/q(implyingUS$1.91-1.95/lb)andAISCwas10-12%lowerq/q(implyingUS$2.68-2.74/lb).CSbelowconsensusforQ3/18:CSisforecastingEPSofUS$0.04,belowconsensusofUS$0.07.WeforecastCFPSofUS$0.39,belowUS$0.43consensusandEBITDAofUS$672M,belowUS$716Mconsensusestimate.OurcashcostsestimateforthequarterisUS$585/ozandAISCisexpectedtobeUS$795/oz.Ourfullyearforecasts4.51Mozs,atthelowerendoftheguidancerangeof4.5-5Mozs.2018fullyearcashcostsisexpectedtobeUS$575/ozandAISCofUS$811/oz,bothatthehigherendofABX’sguidancerangesofUS$540-575/ozandUS$765-815/oz,respectively.2018EPSrevisedtoUS$0.45fromUS$0.43duetocommoditypriceforecastrefreshandrevisedcosts.Commoditypricesandoperationsarekeyriskstoourview.■FahadTariq,CPA,416352MarkLlanes,CPA,416352■■■■SharepriceFinancialandvaluationEPS(CSadj.)Prev.EPS(US$)P/Erel.(%)EBITDA(US$m)OCFPS(US$)P/OCF(x)Netdebt(US$m)ROIC(%)On17-Oct-2018theS&P500INDEXclosedat2809.21DailyOct18,2017-Oct17,2018,10/18/17=Quarterly Numberofshares(m)BV/share(NextQtr.,US$)Netdebt(NextQtr.,US$m)Netdebt/toteq(NextIC(current,US$ EV/IC 0.16 0.04 Source:Companydata,ThomsonReuters,CreditSuisseMetalsand18OctoberBarrickGoldCorpPrice(17Oct2018):US$12.72;Rating:NEUTRAL;TargetPrice:(from18.00)14.50;Analyst:FahadBarrickGoldCorporationisengagedintheproductionandsaleofgoldandcopper(>90%goldrevenues).Thecompany’sminesarelocatedinfourregions:NorthAmerica,SouthAmerica,Australia/Pacificand Depr.&NetinterestBlue/GreySkyOtherNPAT00Changeinworking00Capex-000CashflowfromTotalcurrentBlueskyvaluationisbasedona10%highergoldpriceoutlookourbase TotalGreyskyvaluationisbasedona10%lower18OctoberBarrickGoldCorpPrice(17Oct2018):US$12.72;Rating:NEUTRAL;TargetPrice:(from18.00)14.50;Analyst:FahadBarrickGoldCorporationisengagedintheproductionandsaleofgoldandcopper(>90%goldrevenues).Thecompany’sminesarelocatedinfourregions:NorthAmerica,SouthAmerica,Australia/Pacificand Depr.&NetinterestBlue/GreySkyOtherNPAT00Changeinworking00Capex-000CashflowfromTotalcurrentBlueskyvaluationisbasedona10%highergoldpriceoutlookourbase TotalGreyskyvaluationisbasedona10%lowergoldpriceoutlookourbase NetSharepriceNo.ofshares(wtdPrev.EPS--FreecashflowperSalesgrowthNetprofitgrowthEBITDAmarginPretaxmarginOn17-Oct-2018theS&P500INDEXclosedat2809.21DailyOct18,2017-Oct17,2018,10/18/17=EV/SalesEV/EBITPricetobookROEstated-returnon----Source:Companydata,ThomsonReuters,CreditSuisseMetalsand Interestcoverageratio Asset P/E Netmargin EBITmargin EPSgrowth EBITgrowth CSadj. Per Totalliabilitiesand OurGreySkyScenario Totalcurrent Total OurBlueSkyScenario (from25.00)Cash&cash ChangesinNet Freecashflowtothe Capex- Cashfrom Net Adjustednet Cash Reportednetincome Profitafter PBT EBIT EBITDA(US$ Income 18OctoberAdditionalMorethoughtsonthemerger:Afterspeakingwithanumberofinvestors,theconsensusviewappearstobethatthemergerwithRandgoldispositive,withthebiggestpluspointforBarrickbeingatechnicalCEOinMarkBristowwhocanimproveproductionefficiencyacrossBarrick’smines.ThefactthatthedealwasnopremiumisalsoencouragingasABXdidnotoverpaytoacquireRandgold’smanagementteam,mines,andbalancesheet(RRS’sadditionalcashhelpsshoreupABX’sbalancesheet).ApotentialsnagonthedealisoppositionfromtheCongolesegovernment,whichinsiststhatitmustapprovethedealforABXtoacquireRRS’s45%stakeintheKibalimine.StateminerSokimo,whichowns10%ofKibali,hasalsovaguelystatedthatitwill“assertitsrights”whenitcomestothetakeover.Thoughwethinkthedealwillultimatelyclose,wearelesssureaboutwhatconcessions,ifany,willneedtobemadetoappeasetheseandotherstakeholders.ShareholdersfrombothsideswillvoteonthemergeronNov.5,andthedealisexpectedtocloseattheendofQ1/19.2018productionguidanceunchanged,buthighertaxrate:ABXnowexpectsa48-50%effectivetaxratefor2018(upfrom44-46%previously)assumingaUS$1,200/ozgoldpricefortherestof2018.Thehighertaxratestemsfromasalesmixshifttohigher-taxjurisdictions.■18OctoberAdditionalMorethoughtsonthemerger:Afterspeakingwithanumberofinvestors,theconsensusviewappearstobethatthemergerwithRandgoldispositive,withthebiggestpluspointforBarrickbeingatechnicalCEOinMarkBristowwhocanimproveproductionefficiencyacrossBarrick’smines.ThefactthatthedealwasnopremiumisalsoencouragingasABXdidnotoverpaytoacquireRandgold’smanagementteam,mines,andbalancesheet(RRS’sadditionalcashhelpsshoreupABX’sbalancesheet).ApotentialsnagonthedealisoppositionfromtheCongolesegovernment,whichinsiststhatitmustapprovethedealforABXtoacquireRRS’s45%stakeintheKibalimine.StateminerSokimo,whichowns10%ofKibali,hasalsovaguelystatedthatitwill“assertitsrights”whenitcomestothetakeover.Thoughwethinkthedealwillultimatelyclose,wearelesssureaboutwhatconcessions,ifany,willneedtobemadetoappeasetheseandotherstakeholders.ShareholdersfrombothsideswillvoteonthemergeronNov.5,andthedealisexpectedtocloseattheendofQ1/19.2018productionguidanceunchanged,buthighertaxrate:ABXnowexpectsa48-50%effectivetaxratefor2018(upfrom44-46%previously)assumingaUS$1,200/ozgoldpricefortherestof2018.Thehighertaxratestemsfromasalesmixshifttohigher-taxjurisdictions.■■FinancialFigure8:Financial Source:Companydata,CreditSuisseMetalsand18OctoberOperatingFigure9:Operating JabalSayid CashCosts Source:Companydata,CreditSuisseMetalsandTotalcopperweightedBarrickcopper$1.57$$1.57$$1.62$$1.56$$1.91$$2.00$$1.90$$1.96$ $$$$$1.83$ $2.09$ $1.61$ $18OctoberOperatingFigure9:Operating JabalSayid CashCosts Source:Companydata,CreditSuisseMetalsandTotalcopperweightedBarrickcopper$1.57$$1.57$$1.62$$1.56$$1.91$$2.00$$1.90$$1.96$ $$$$$1.83$ $2.09$ $1.61$ $1.95$ $1.76$ $1.81$ $1.81$ $1.79$ $1.93$ $1.56$ $1.57$ $1.66$ Totalgoldweighted 546 563 585 3.9% 526 574 0.1% 582 (3.6%) 600 NorthAmericaPuebloOtherNorthAmerica:TurquoiseRidgeGoldenSunlightQ3/17A Q3/18ERQ3/18EPQ3/18EQ3/17A 2018E% 2019E% 2020E% 441 442 617 $1,500$$1,130 510 450 581 $1,074$ $ 509 440 632 $1,742$ $1,095$ 530 386 639 - 897 556 507 419 - .$873 TotalNorth 791 531 548 533 $559 390 637 476 906 424 598 549 602 548 600 TotalSouth 515 662 516 580 578 853 701 754 726 782 731 806 790 804 788 Total 760 738 750 797 795 NorthMara 863 550 564 598 496 894 616 528 947 474 647 972 473 665 921 637 577 649 631 633 Barrickgold BarrickNevadaPuebloViejoOtherNorthAmerica:TurquoiseRidgeGoldenSunlightQ3/17AQ3/18EQ3/18A Q3/17A 2018E% 2019E% 2020E% TotalNorth LagunasNorte TotalSouth Total NorthMara Total ProductionSummary18OctoberPreciousFrancoNevadaCorporationTargetprice(US$)(from80.00)Q3/18Preview:OilandgasprovidingsomeupsideduringQ3metalsdownturn52-weekpricerange -58.87Marketcap(US$Enterprisevalue(US$ 18OctoberPreciousFrancoNevadaCorporationTargetprice(US$)(from80.00)Q3/18Preview:OilandgasprovidingsomeupsideduringQ3metalsdownturn52-weekpricerange -58.87Marketcap(US$Enterprisevalue(US$ FNVtoreportQ3/18earningsonNov.5thafter-market,conferencecalltobeheldonNovemberat86:th00AMEST(1-888-390-0546).CSisforecastingQ3/18EPSofUS$0.22,belowUS$0.26consensus.DecreasingTPtoUS$75.00fromUS$80.00,maintainNeutralrating:Wehaverevisedournear-termgoldpriceforecastbasedontheforwardcurveforQ4/18(US$1,228/oz)and2019(US$1,252/oz),thoughwemaintainourLTforecastofUS$1,300/oz.Wemadeseveralfine-tuningadjustmentsincludingreviewingoperationsatseveralofFNV’sstreams.OurTPisbasedona50/50weightingofourNAVPSofUS$33.03usinga2.3xmultipleandourH218/FY19blendofUS$2.51usinga29.0xmultiple.CobrePanamastillago:AfterPanama’sSupremeCourtruledagainsttheenactmentofaspecificmininglawinlateSept,FNVandFMbothclarifiedthattherulingdoesnotimpacttheminingconcessioncontractforCobrePanama,suggestingtherewillbenopauseindevelopingthemine.CSbelowconsensusforQ3/18:CSisforecastingEPSofUS$0.22,belowbelowbothUS$0.61andUS$125Mconsensus.OurrevisedCSforecastsis109.4kGEOforQ3and440.2kGEOfortheyear(belowrevisedmid-pointguidanceof440-470kGEO)andUS$17MinQ3Oil&GasrevenuesandUS$75.6Mfor2018,slightlyaboveUS$65-75Mguidance.R