Barrick Gold: Too Cheap Even With Location Risks

Barrick Gold (GOLD) has long been a bellwether for the gold mining sector, but its recent valuation metrics suggest it may be pricing in more risk than reality warrants. Despite operating in politically volatile regions—from Pakistan’s Balochistan to the Democratic Republic of Congo—the stock’s enterprise value-to-EBITDA (EV/EBITDA) ratio of 7.98 as of April 2025 sits well below both its five-year average (8.52) and the industry median (13.35). Is this undervaluation justified, or is the market overlooking Barrick’s strategic strengths? Let’s dissect the numbers.

Valuation: A Bargain at Current Levels?

Barrick’s EV/EBITDA ratio of 7.98 (calculated using an enterprise value of $49.888 billion and trailing EBITDA of $6.255 billion) underscores its affordability relative to peers like Newmont (NEM, EV/EBITDA 7.84) and starkly contrasts with higher multiples in streaming firms such as Wheaton Precious (WPM, 53.73). This metric suggests investors are paying less than eight times the company’s cash earnings—a discount that could narrow if geopolitical risks abate or commodity prices rise.

The stock’s recent price action reflects this tension. After climbing to a 2025 high of $20.65 on April 16, it retreated slightly to $20.17 by April 17, yet remains up 7.25% since mid-March. Analysts at National Bank of Canada and Raymond James have raised price targets to C$35 and $26.50, respectively, citing robust gold demand and project catalysts like the Reko Diq joint venture.

Operational Strengths: Cash Flow and Growth

Barrick’s financial health underpins its valuation resilience. In 2024, its EBITDA margin hit 59.48%, while free cash flow doubled year-over-year, fueled by cost discipline and higher metal prices. The company aims to boost gold equivalent ounces (GEO) by 30% by 2030, with projects in Chile, Saudi Arabia, and Zambia positioning it to capitalize on decarbonization-driven copper demand. The Reko Diq project alone, slated for first production in 2028, could add 200,000 GEO annually, making it a cornerstone of long-term growth.

The Risks: Geopolitics and Commodity Volatility

Critics argue that Barrick’s exposure to unstable regions—such as Pakistan’s Reko Diq, which has faced local opposition and security concerns—justifies its discount. Similarly, operations in the DRC and Côte d’Ivoire carry political and logistical risks. These challenges, while manageable, could disrupt output or raise costs.

Commodity price swings also loom large. While gold’s safe-haven appeal has supported prices near $2,000/oz, copper faces headwinds from global economic slowdowns. Barrick’s copper exposure, however, is balanced by its gold dominance, which accounted for 73% of 2023 revenue.

Conclusion: A Calculated Bet on Resilience

Barrick Gold’s valuation appears compelling, especially for investors willing to tolerate geopolitical noise. With an EV/EBITDA 40% below the industry median and a projected dividend yield of 3.59% by 2026, the stock offers both income and growth potential. Key catalysts—Reko Diq’s progress, rising copper demand, and a disciplined capital allocation strategy—could drive revaluation.

Yet risks remain. Should geopolitical tensions escalate or copper prices slump, the stock could falter. For now, though, the data suggests the market has overpriced the negatives. At current levels, Barrick presents a high-reward opportunity for those with a three- to five-year horizon, provided they monitor execution on flagship projects and macroeconomic trends.

In summary, Barrick Gold’s discounted valuation reflects real risks but overlooks its operational resilience and strategic asset base. For investors seeking exposure to a dominant miner with a strong balance sheet and growth pipeline, the stock’s current price may indeed be too cheap to pass up.