Barrick used a 16% WACC to value its Mali mine

Two figures in Barrick’s latest accounts explain Loulo-Gounkoto better than the company’s claim that the restart is ahead of schedule. The mine generated a 53% EBITDA margin in Q2 2026. When Barrick brought it back onto the balance sheet in December 2025, the company used a 16% weighted average cost of capital to value the mining interests.

These figures measure different things. The margin records one quarter of operating performance. The WACC discounts cash flows expected over many years. Comparing them as competing percentages would be wrong.

Together, they expose Barrick’s international portfolio problem. Loulo-Gounkoto can produce substantial operating earnings while Barrick’s own model heavily discounts its future cash flows. As Barrick prepares to sell a minority stake in a separately listed North American company, Mali shows what the restructuring is trying to separate for the market.

What the 16% says

WACC is the rate used to convert forecast cash flows into a present value. It normally reflects the required returns of debt and equity providers, along with risks embedded in the valuation. Barrick does not disclose the components of Loulo-Gounkoto’s 16% rate, so the figure cannot be labelled a pure measure of Malian political risk.

The rate still matters. For intuition, one dollar received ten years from now is worth about 23 cents today when discounted at 16% a year. This simple example is not Barrick’s mine model. It shows how strongly the rate reduces the value of distant cash flows.

Barrick’s model also used a long-term gold price of US$3,000 an ounce. The group realised US$4,417 an ounce in Q2. The 53% margin therefore describes a quarter with a gold price far above the one used in the long-term valuation. That is another reason the two percentages cannot be treated as direct comparators.

Barrick initially assigned Loulo-Gounkoto a provisional fair value of US$3.220 billion on a 100% basis when it regained control. Its Q2 filing reduced that figure by US$91 million to US$3.129 billion, mainly after recognising additional royalties, penalties and interest for periods before the handback. Barrick’s 80% interest was valued at US$2.503 billion. The filing repeats the 16% WACC and US$3,000 long-term gold assumption.

This is an accounting valuation, not a market price or a promised return. It matters because Barrick chose the assumptions and disclosed them.

What the 53% margin leaves out

Loulo-Gounkoto’s second-quarter operating results were strong. Based on Barrick’s 80% share, the complex produced 88,000 ounces, earned US$385 million of revenue and generated US$204 million of EBITDA. Mali owns the remaining 20%.

Production rose 38% from Q1. Ore throughput rose 33%, processed grade increased 4% and recovery held at 92%. Open-pit mining resumed alongside higher underground output. Barrick’s evidence supports the claim that the ramp accelerated.

The margin does not capture the full economic result. EBITDA means earnings before interest, tax, depreciation and amortisation. It is a non-GAAP measure, meaning it sits outside standard accounting measures and must be read alongside the company’s reconciliation. Barrick’s segment note also says Loulo-Gounkoto’s result excludes other expenses for additional royalties, penalties and interest linked to the retrospective application of Mali’s 2023 Mining Code.

At group level, Barrick recorded US$209 million of other expense in Q2. The company said the line mainly reflected those historical Mali liabilities and remobilisation costs, partly offset by a positive revaluation of contingent consideration from the Hemlo sale.

Subtracting all US$209 million from the mine’s US$204 million of EBITDA would also be wrong. It would mix a site measure with a company-level line that covers earlier periods, current remobilisation and an offset elsewhere. The correct conclusion is narrower: the 53% margin is valid on Barrick’s definition, but it does not represent the complete cash return from Mali.

The fiscal reconciliation remains open

Barrick paid the Malian government US$200 million in April for additional royalties, penalties and interest relating to 2024 and 2025. On 1 July, the government notified the mine that about US$48 million of further penalties remained due. Barrick said it expected to settle that amount through cash and value-added-tax offsets while discussions continued.

Royalties on ongoing production belong in the current cost base. The filing also identifies separate retrospective liabilities under the 2023 code. The historical payments and penalties sit outside the site margin. Both affect value, but in different ways.

The ramp has not reached a steady state

Loulo-Gounkoto delivered 152,000 attributable ounces in the first half against full-year guidance of 260,000 to 290,000 ounces. It needs another 108,000 to 138,000 ounces across Q3 and Q4, an average of 54,000 to 69,000 per quarter. Q2 alone delivered 88,000.

Volume guidance therefore has room, assuming operations remain stable. Barrick’s claim that the restart is ahead of schedule is harder to test because the company has not published the original restart timetable or mine-level quarterly targets. Investors can verify the acceleration. They cannot measure how far it ran ahead of the internal plan.

Costs point to further work. Q2 all-in sustaining cost was US$2,240 an ounce, up 16% from Q1 after US$28 million of sustaining capital returned to the calculation. Barrick still publishes full-year Loulo-Gounkoto guidance of US$2,640 to US$2,900 an ounce and says capital spending will increase in the second half. Its 2024 AISC was US$1,304 an ounce on 578,000 attributable ounces of production.

The 2026 figures describe a smaller, more expensive operation than the one Barrick ran before the suspension. Some of that difference reflects ramp-up spending, lower volume and the stronger gold-price effect on royalties. Q2 does not establish a steady-state cost base.

The US$1 billion “write-off” was an accounting event

Mali’s actions in 2025 created a real interruption. Barrick suspended operations on 14 January after the authorities restricted gold shipments and removed stock from the site. On 16 June, a Bamako court placed the complex under provisional administration. Barrick retained legal ownership of its 80% interest but lost operational control.

Accounting rules then required Barrick to deconsolidate the mine. It derecognised US$3.421 billion of net assets, derecognised US$686 million of non-controlling interests and recognised a retained investment at US$1.700 billion. The resulting loss was US$1.035 billion before tax and US$598 million after tax.

That charge did not mean Barrick sold the mine or paid US$1.035 billion in cash. When operational control returned on 16 December, Barrick consolidated the mine again at fair value. The company later said the accounting impact of regaining control largely offset the losses recognised earlier in 2025.

Calling the episode a US$1 billion write-off is therefore misleading. The stronger criticism concerns the interruption itself: almost a year without normal production, restricted access to gold, a court-appointed administrator, revised fiscal terms and cash paid to settle historical claims. The accounting moved when control changed. The operating and contractual disruption remained real.

The North American IPO makes Mali easier to price

Barrick plans an IPO of a minority stake in a new company holding Nevada Gold Mines, Pueblo Viejo, Fourmile, other North American exploration properties and assets contributed by Newmont. Newmont has consented to the IPO and agreed to pay Barrick a US$1.95 billion cash top-up as part of a wider Nevada settlement. Barrick expects the listing by year-end, subject to approvals and market conditions.

The transaction stops short of a full break-up. Barrick intends to retain a significant controlling interest in the new company. Existing shareholders will still own a parent exposed to the international portfolio and a controlling stake in North America.

The organisational separation is becoming clearer. On 11 August, Barrick appointed Sebastiaan Bock chief executive of its Rest of World division, responsible for operations and projects outside North America. Barrick’s appointment release states that the portfolio produces more than two million gold-equivalent ounces a year.

A separate listing should give investors a visible market price for the North American assets. It may also make the value assigned to the international portfolio easier to examine, although the retained controlling stake and parent structure will prevent a clean subtraction.

Barrick calls the new vehicle a collection of assets in “low-risk jurisdictions”. Investors should treat that phrase as corporate positioning, not a financial category. The Nevada business itself required a negotiated settlement with Newmont before the IPO could proceed. Every region carries political, contractual or partner risk. What changes is the type of risk and the mechanism available to resolve it.

Loulo-Gounkoto offers a specific record. A revised mining code, blocked shipments, provisional administration and an ongoing tax reconciliation changed the timing and terms of Barrick’s access to the mine. Barrick does not isolate those factors in its WACC disclosure, but the 16% rate records heavy discounting in the valuation.

The test from here

Q2 demonstrated Loulo-Gounkoto’s operating profitability. The remaining question is how reliably Barrick can convert the mine’s long-life orebody into cash after capital spending, taxes, royalties and agreements with the state. The 16% discount rate is one valuation input. Future operating results, fiscal settlements and cash flows will test the investment case.