August 25, 2009

SWOT Analysis - Barrick Gold

Barrick Gold Corporation (Barrick) is one of the largest gold mining companies globally, having 27 operating mines and five development projects in Canada, the US, Australia, Chile, Peru, Argentina, and Tanzania. The company's strong project pipeline ensures a steady revenue growth and has boosted investor confidence. However, changes in local and national government legislations, taxations, controls, regulations, and political or economic developments across key countries may affect the company's business prospects.


Strong market position - Barrick is the only company in the gold mining industry that possesses an ”A” rating balance sheet. The company has the largest reserves in the industry, with 124.6 million ounces of proven and probable gold reserves, 6.2 billion pounds of copper reserves, and 1.03 billion ounces of contained silver within gold reserves as atDecember 31, 2007.

Strong project pipeline - Barrick has been progressing a new generation of projects that advanced significantly in 2008: Buzwagi in Tanzania, Cortez Hills in Nevada; Pueblo Viejo in the Dominican Republic; Pascua-Lama, Chile/Argentina; Buzwagi, Tanzania; Donlin Creek, Alaska, the US; Reko Diq, Pakistan; Sedibelo, South Africa; Federova, Russia; and Kabanga, Tanzania. A strong project pipeline ensures a steady revenue growth and has boosted investor confidence.

Emphasis on exploration - Even at times when gold prices are low, the company was conscious of not diluting the emphasis on exploration. Barrick has a motivated, discovery focused team of over 150 geo-scientists exploring approximately 100 properties in 16 countries around the world. Reserve development and replacement of production is a major priority at all sites. The company consistently funds its exploration programs throughout all gold cycles, and has a proven track record of finding ounces at both greenfield and brownfield projects.


Contingencies, claims, and litigations - The company has a number of lawsuits pending against it. In June 2003, Barrick's shareholders filed a complaint in the New York district court alleging that Barrick had violated the US security laws by providing misleading and false statements about its earnings and operating results in 2002. In September 2004, Dr. Gregg McKenzie filed a putative class action complaint against Barrick and JP Morgan in the Louisiana district court. This complaint alleged that the company violated the Commodity Exchange Act and US antitrust laws and sought damages and an injunction to terminate certain trading agreements Barrick entered into with J.P. Morgan. Another similar complaint was filed against Barrick during December 2004. In September 2004, a complaint was filed in the New Mexico district court against two of Barrick’s subsidiaries, Homestake and Home-stake California. The plaintiffs sought damages, alleging that they had been exposed to radioactive and other hazardous substances.

Decreasing production levels in old mines - The old mines of Barrick’s are facing decreasing production levels. Production is declining primarily as a result of lower-grade ore processed at Eskay Creek, Goldstrike Open Pit, and Pierina and the depletion of reserves at Holt-McDermott. Declining production levels in matured mines generate lower grade ores, thereby affecting production and ultimately reducing the revenue generated by the company.


New development projects - The company has entered into a joint venture with Xstrata for the Kabanga nickel sulphide project in Tanzania making it similar in size and grade to the world-class Voisey’s Bay mine in Labrador. Further, Barrick and NovaGold formed a limited liability company, jointly owned by Barrick and NovaGold on a 50/50 basis, which will oversee development of the Donlin Creek project in Alaska. These new development projects would add to Barrick’s resource reserves and enable the company to generate incremental revenues

Explorations in Russia and Central Asia - Barrick is exploring properties in Russia and Central Asia. Barrick's programs are complemented by strategic relationships with Celtic Resources and Highland Gold, which helped in developing assets in Russia and Central Asia. Barrick has an equity position in Celtic Resources and also has back-in rights for up to 50% in any assets purchased in Kazakhstan and also on certain other assets Acquisitions of Cortez property in the Nezhdaninskoye project. Barrick's investment in Highland Gold enables it to participate on an
exclusive basis for up to 50% on any purchase made by Highland Gold in Russia. These relationships would help Barrick to familiarize itself with the Russian and Asian regions and
to refine its development options in these prospective regions.


International political and economic issues - Changes in local and national government legislations, taxations, controls, regulations, and political or economic developments across key countries may affect the company's business prospects.The Pascua-Lama project straddles the border between Chile and Argentina, with some of the operations to be built on the Chile side, and other parts of the project on the Argentinean side. This can throw up cross-border issues, including permits and taxes. Furthermore, if recent history is any indication, obtaining permits to develop a large-scale gold mine in Argentina will not be an easy task. International political and economic issues could, therefore, be a hindrance in the smooth functioning of the company’s various operations.

Inherent risk in the mining operations - Barrick is subject to all the inherent risks associated with the gold exploration and mining business, which include critical issues like industrial accidents, environmental hazards, unusual and unexpected formations, cave-ins, flooding and pressures, and also the risk of inadequate insurance, or an inability to obtain insurance. These apart, there are also risks of obtaining necessary permits and licenses, decreasing grades or quantities of reserves, and changes in the credit rating, all of which can hinder the business operations.

Environmental laws and regulations - Barrick’s ongoing mining operations and exploration activities are subject to extensive laws and regulations governing exploration, development, production, occupational health, mine safety, toxic substances, waste disposal, protection and remediation of the environment, protection of endangered and protected species, and other related matters. Compliance with these laws and regulations imposes substantial costs and it is expected that these costs would continue to increase in the future because of increased demand for remediation services and shortages of equipment, supplies, labor, and other factors.

August 16, 2009

Six Things You Should Avoid Before Buying a Home

Buying a home is not an impulse buy. In most cases you will have a few months notice before you actually go through with the sale. Planning ahead is crucial particularly if you don't have extensive financial resources. Since mortgage lenders will be sizing up your finances carefully, don't give them any reason to reject your application.

You never know what effect today’s actions will have on your mortgage application in three or even six months. Even something as simple as transferring money from your savings to your chequing account can negatively impact the mortgage process. So here are some suggestions of things you should avoid before buying a home:

1. Do not make any major purchases
Don't invest in any major purchases. Cars, weddings, jewellery, furniture and electronics can all wait until you're settled in your new home. When you make a major purchase, you limit the amount of money available for your down payment, and decrease the amount of liquid capital in your name.

If you do have to make a major purchase before buying a home, you might want to put it on a low-interest credit card until after your mortgage application is approved. Sometimes you can't control what life throws your way, but think carefully about your options before making a decision.

2. Don’t move money around
When a lender reviews your loan application for approval, one of the things they are concerned about is the source of funds for your down payment and closing costs. To do so, they will request statements from all of your accounts that contain liquid assets.

Moving your money around, even if you are consolidating your funds to make it "easier," could make it more difficult for the lender to properly document and measure your finances. So leave your money where it is until after closing.

3. Do not make large investments
It is also not recommended to make investments just before buying a home; again, you're decreasing the liquidity of your assets. If you've come across a new stock in which you'd like to invest or if it's a great time to buy bonds, wait until after you've settled the finances on your home.

Furthermore, you'll have to disclose all of your finances before buying a new home, which means accounting for every withdrawal and deposit in all of your accounts. This can get quite tedious, especially if you're trying to dig up cancelled cheques for the new home theatre or HDTV you just had to have three months ago.

4. Do not change your bank
Changing banks is always a hectic ordeal, so don't do it before buying a home. You'll have to provide information about previous accounts that are now closed, and therefore inaccessible. And if you diversify your money too much in money market accounts, savings accounts, chequing accounts and other places, you'll have a harder time with the disclosure process.

If you're frustrated with your bank and want to change, tough it out a little longer and switch after your mortgage is approved and you've set up shop in your new home. This will save you hours of headaches and frustration.

5. Do not apply for a new credit card or line of credit
Even though the inquiry won’t hurt your credit too badly if you already have a good credit score, the additional credit card will cause the lender to question your financial stability for buying a home.

6. Do not change your job unless absolutely necessary
Try not to change jobs. Your employment is a key factor in the mortgage approval process, and if you can't show steady employment, you might be denied. Of course, you can't help matters if you've just been laid off or an opportunity presents itself that you can't pass up.

This could become more difficult if you become self employed. In most cases, lenders want to see at least two years of self-employment before they will approve you for a loan. So if you can, wait until after buying a home to become self-employed. For part-time workers, changing jobs creates unpredictability in the number of hours you will work so the lender cannot determine your gross income to qualify you for a loan.

If you're going to change jobs before buying a home, wait another six months before going ahead with the real estate transaction. This gives you an opportunity to establish employment and to show a steady income from a single employer. This looks much better on a loan application than a long list of recent employers.

As mentioned above, there will be times when you can't avoid all of these things before buying a home, but know that it's in your best interests to wait until the dust settles. The goal should be to move into your new house with as few obstacles as possible.

August 13, 2009

Canada Auto Sales for July 2009

Here is the new auto sales statistics in Canada for July, 2009.

Acura: +7% to 1,644
Audi: +40% to 822
BMW: +12.1% to 2,398
Chrysler: -10.4% to 15,958
Ford: +47.4% to 26,788
General Motors: -41.9% to 19,663
Honda: -22% to 11,340
Hyundai: +37.8% to 10,488
Infiniti: -1.5% to 702
Jaguar: -3.2% to 90
Kia: +29.6% to 5,110
Land Rover: -24.6% to 129
Lexus: +13.9% to 1,512
Mazda: -18.5% to 6,491
Mercedes-Benz: +9.5% to 1,978
Mini: -11.8% to 442
Mitsubishi: +18.7% to 1,901
Nissan: -3.2% to 6,832
Porsche: +37% to 200
Saab: -85.8% to 38
smart: -42% to 290
Subaru: -3.2% to 1,763
Suzuki: -8.7% to 1,158
Toyota: -14.2% to 17,720
Volkswagen: +14.6% to 4,018
Volvo: +39.4% to 591