"We believe there are several risks to ABX's achievement of our $13 target price. ABX is subject to commodity price and foreign exchange risk as fluctuations in the gold, copper, silver and foreign exchange rates will impact profitability," analysts' said.
Analysts cited additional risks including "inflationary pressures particularly for fuel, consumables, equipment and labour, fluctuations in ore grade or recovery rates or changes to the mining sequence [that could] impact production and costs forecasts, and [exposure] to development and permitting risk with respect to its development projects, in particular Pascua Lama."
"ABX is also exposed to political risk with regards to the permitting and tax rates applicable to its current mines and development projects. ABX has about $13 billion in notional debt and is unhedged vs. the gold price. A significant negative fluctuation in the gold price vs. our estimates could require the company to hedge, sell assets or raise equity in the future to meet its debt obligations," they added.
Gold futures for February delivery were down 0.94% to $1,196.40 an ounce at 1:09 p.m. on the COMEX in New York.
Gold futures posted the longest slump in five weeks yesterday on concern that the Federal Reserve is moving closer to raising U.S. interest rates, crimping demand for the precious metal as an alternative investment, according to Bloomberg.