Analysis indicates that there are roughly four types of business models in the market. The first type of business relates to deposits and the raising and lending of funds—a model widely adopted by banks that currently dominate the financial system. Apart from the financial crises that seem to occur once or twice every century, these enterprises are often stable, profitable, and defensive.
The second business model is referred to as the "asset-heavy" model. These companies invest in assets that generate economic value—such as utilities, real estate, airlines, and communication infrastructure. Cell towers, passenger aircraft, pipelines, and office buildings all produce stable revenue streams, and the task for these businesses is to finance these assets at favorable interest rates while keeping operating costs low and returning as much profit as possible to shareholders. These are excellent businesses, although their growth pace might be considered somewhat "slow."
Next, there are "standard" businesses—companies that produce goods or services and then charge a premium above their costs. This category encompasses almost every type of enterprise, from selling consumer goods and consulting services to tractors, software, and more. For these businesses, the key is acquiring customers and optimizing the delivery process as much as possible. These types of enterprises, especially those with recurring revenue, are quite popular with investors due to their high predictability.
Finally, there are higher-risk business models—commodity leveraged plays. This is not to say that commodity leverage businesses are unimportant; they are crucial because society is largely built from materials and energy products extracted from the ground, often financed by shareholders sacrificing capital. The problem with these enterprises is their extreme dependence on commodity prices. For gold miners, oil drillers, and agricultural producers, their survival hinges on producing as much as possible, selling it on the open market, and hoping to turn a profit after covering costs. This is a tough business model, and the operational performance of such companies is almost entirely unpredictable.
However, analysts point out that there are some rare opportunities within these "commodity levered" companies—Barrick Mining Corporation (B.US). Barrick Mining is a world-leading gold and copper producer with mining operations across the globe. Given the recent surge in gold prices, some might consider the stock overbought, but analysts believe it still has significant upside potential, driven by rising gold prices, consistently excellent operations, and ongoing performance improvements.
Fundamentally, Barrick Mining is one of the world's largest mining companies, currently boasting a market capitalization of $81 billion. The company generates over $10 billion in annual revenue, primarily from its numerous mines extracting gold and copper worldwide.
When considering a business like Barrick Mining, the simplest way to understand it is: draw a straight line representing the company's sustaining costs, then overlay a chart of gold and copper prices. Whenever the prices of gold and copper exceed their respective sustaining costs, Barrick Mining profits; when prices fall below the company's costs, it incurs losses. Therefore, if Barrick's fixed cost base—including wages, equipment, mining royalties—remains relatively stable, even small changes in the gold price can lead to significant swings in profitability.
For instance, if Barrick's total cost to mine an ounce of gold is approximately $1,000, a gold price increase from $1,100 to $1,300 per ounce would effectively triple the company's profitability. This is why Barrick Mining and other mining and energy companies are termed "commodity levered" businesses—their profitability and stock prices are highly correlated with the underlying commodities they produce.
In Barrick's case, the company has operated relatively conservatively; as of the most recent quarter, it held substantial mine assets globally and a cash reserve exceeding $5 billion. This cash buffer strategy is prudent, allowing management to navigate the volatility inherent in underlying commodity markets.
In the most recent quarter, Barrick produced approximately 829,000 ounces of gold and 55,000 tonnes of copper, with respective all-in sustaining costs (AISC) of $1,538 per ounce and $3.14 per pound.
Similar to the AISC situation, the company's cost base has shown little change compared to the previous year or quarter, with gold mining costs fluctuating within a low single-digit percentage range over the past 12 months. Copper operation costs have been slightly more volatile, but these changes have also been relatively minor.
In contrast, Barrick's revenue has surged over the past year—increasing by over 23%, fueled by rising gold and copper prices.
More importantly, this has significantly boosted Barrick's profitability, with its gold business growing 52% year-over-year and its copper business surging 99%.
As gold and copper prices continue to decouple from the company's total mining costs, every incremental increase in commodity prices directly impacts Barrick's bottom line.
Further good news for the company is the positive outlook for gold this year. Even if Bitcoin captures some market share, central bank buying, falling real interest rates, and strong technical momentum could push gold prices higher. Therefore, even if gold prices merely hold steady or rise moderately, Barrick Mining could be poised for a highly profitable year.
Analysts currently forecast earnings per share (EPS) growth of 80%, 48%, and 11% year-over-year for 2025, 2026, and 2027, respectively. With a robust balance sheet and very low financial leverage, higher commodity prices have already set the stage for, and will continue to contribute to, a prosperous period for Barrick in the coming years.
Valuation The intrinsic performance of mining stocks can appear attractive, but if commodity prices fall, the stocks can become much more expensive than initially thought. However, with inflation and de-dollarization potentially eroding the dollar's store of value, gold prices tend to trend higher. Consequently, expectations that gold prices may continue fluctuating within a stable or rising range help contextualize Barrick's current stock price.
Currently, based on estimated earnings, Barrick Mining trades at a price-to-earnings (P/E) ratio of 21x.
By 2026, with EPS projected to grow nearly 50% year-over-year, its P/E ratio is expected to drop to approximately 14x.
Finally, assuming 11% EPS growth, analysts forecast Barrick's 2027 P/E ratio to be around 12.6x.
In essence, the stock currently trades around a 20x P/E, which could potentially plummet to around 10x within the next 24 months. For investors, if these estimates materialize, this implies one of two scenarios—either the stock price remains flat while the valuation compresses, or Barrick's stock price rises to maintain its current valuation multiple. Barrick's stock could either become significantly cheaper on a P/E basis over the next few years, or it could experience substantial price appreciation. Viewed this way, its growth potential becomes more pronounced.
Regarding fair value, analysis suggests Barrick Mining's fair value for the next year is approximately $71 per share.
This assumption employs a sub-market P/E ratio of 20x, combined with analysts' growth expectations for the next two years. Given that Barrick's current valuation—with a forward PEG ratio of 0.45—appears exceptionally cheap relative to its growth prospects, this is a relatively conservative estimate.
Not only is Barrick's stock price 65% lower than the industry average P/E ratio, but the company itself is also projected to achieve stronger growth, solidifying its status as a reasonably priced, highly leveraged gold stock with significant potential for price appreciation in the coming years.
Finally, highly leveraged stocks like mining companies often see their share prices exhibit amplified movements relative to their underlying commodity prices. That is, if the gold price rises 10%, the stock price of a gold miner closely tied to gold might rise 30% as a result. However, Barrick Mining has shown the opposite pattern; over the past five years, its stock price has actually lagged behind the performance of both copper and gold prices.
Therefore, Barrick Mining appears to have substantial room for upside, representing a catch-up trend that the market has not yet fully priced in.
In summary, the combination of higher or stable gold prices, strong operational performance, and relatively reasonable valuation collectively form a compelling buy thesis for Barrick Mining over the next 12 months.
Risks Of course, investing in Barrick Mining carries risks. As a commodity-leveraged investment, Barrick's investors are essentially betting on sustained strength in gold prices. However, this doesn't always happen, and when prices fall, mining companies like Barrick often face disproportionately severe market punishment. If gold or copper prices experience a minor or significant decline in 2026, Barrick's stock price would likely follow suit. This occurred in mid-2022 when copper prices plunged, dragging Barrick's share price down with them.
Beyond direct commodity price risk, Barrick also faces long-term execution risks related to production levels, development of new mines, and the traditional operational challenges inherent to being a global top-tier gold producer. Jurisdictional challenges, particularly in developing nations, remain present; geopolitical instability, while potentially boosting gold prices, could also negatively impact Barrick's mining operations in various regions.
Summary Overall, however, analysts believe that investing in Barrick Mining over the next 12 to 24 months represents a low-cost, high-leverage way to gain exposure to stable or rising gold prices. The company's stock appears cheap relative to its peers and is expected to continue appreciating as the company executes its strategic initiatives.
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