The world's four biggest (by production) primary gold miners have now reported preliminary numbers for 2010; Newmont (NYSE:NEM) has arguably produced the best overall numbers. On another tack, Barrick's (NYSE:ABX) awesome cash generating powers were on full view for 2010: for those rare investors prepared to look forward into the longer term, Barrick's outcome probably wins the contest.
Revenues at both Barrick and Newmont are assisted by sales of copper, a metal which turned in a singularly spectacular price performance across 2010. AngloGold Ashanti (NYSE:AU) finally killed off its hedge book in October 2010, at costs running into billions of dollars spread across the past three years. Barrick wiped its hedge book out rapidly in 2009, also at a multi-billion dollar cost.
Earlier this week, Barrick for the first time added free cash flow (simply operating cash flow, less capital expenditure) to its key statistics. An aggregation of the numbers for the four big gold diggers shows operating cash flow of USD 11.3bn for 2010, more than USD 3bn higher than the outcome for 2009, and well over double 2008's comparable number. (For insomniacs: BHP Billiton, the world's biggest diversified resources group, produced operating cash flow in 2010 of USD 24.7bn).
Aggregate capital expenditure for the top four gold miners in 2010 was USD 6.9bn (nearly half of that was from Barrick), rising inexorably as costs increase, but also indicating that the groups remain confident to invest in growth. Combined free cash flow for 2010 was USD 4.4bn, twice the outcome for 2009. Dividend payments have been rising, and the groups have been attending to balance sheet metrics. Net debt (including cash) fell sharply by end-2010 to USD 4.4bn, from a peak of USD 8.6bn two years previously.
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