All amounts expressed in U.S. dollars
Barrick Gold Corporation (NYSE:ABX)(TSX:ABX) (“Barrick” or the
“Company”) today announced preliminary second quarter production of
1.07 million ounces of gold, and 83 million pounds of copper, as
well as preliminary second quarter sales of 1.04 million ounces of
gold, and 74 million pounds of copper. The average market price for
gold in the second quarter was $1,306 per ounce, while the average
market price for copper was $3.12 per pound.
Preliminary second quarter gold production of
1.07 million ounces was roughly in line with the first quarter of
the year. Second quarter gold cost of sales per ounce1 is expected
to be slightly higher quarter-over-quarter, with cash costs per
ounce2 and all-in sustaining costs per ounce2 approximately 5-7
percent higher than the first quarter. This was primarily driven by
planned maintenance at the Barrick Nevada roaster and the Pueblo
Viejo autoclaves.
We are maintaining our 2018 consolidated gold
production guidance of 4.5-5.0 million ounces, at a cost of sales
of $810-$850 per ounce1, cash costs2 of $540-$575 per ounce, and
all-in sustaining costs2 of $765-$815 per ounce.3 We expect gold
production to be higher in the second half of the year following
the completion of major planned maintenance shutdowns in the first
half of 2018, along with reduced development and stripping in the
second half of the year. Costs are expected to be lower in the
second half of 2018, reflecting increased production from our
lower-cost operations at Barrick Nevada and Pueblo Viejo, with
higher grades and increased throughput following the completion of
scheduled maintenance. Full processing capacity has also been
restored at the Porgera Joint Venture earlier than our initial
expectations, following the earthquake that struck Papua New Guinea
on February 26, 2018.
Preliminary copper production in the second
quarter of 83 million pounds was slightly lower than the first
quarter. We expect a quarter-over-quarter increase in our
consolidated copper cost of sales per pound1 and C1 cash costs per
pound2 of approximately 17-19 percent and 11-13 percent,
respectively, due to higher crusher repair costs. Capitalized
stripping at Lumwana was also higher than first quarter, in line
with the mine plan, leading to consolidated all-in sustaining costs
per pound2 that are approximately 15-17 percent higher than the
first quarter.
We are adjusting our 2018 copper production
guidance to 345-410 million pounds, compared to our initial
guidance of 385-450 million pounds.3 We also expect copper cost of
sales per pound1 to be $2.00-$2.30, C1 cash costs2 to be
$1.80-$2.00 per pound, and all-in sustaining costs2 to be
$2.55-$2.85 per pound.3 This compares to initial guidance of
$1.80-$2.10 per pound, $1.55-$1.75 per pound, and $2.30-$2.60 per
pound, respectively. The revisions to our copper production and
cost guidance primarily reflect operational challenges at Lumwana
in the first half of the year. We expect higher production at
Lumwana in the second half of 2018, driven by a steady improvement
in grade and improved crusher reliability.
Barrick will provide additional discussion and
analysis regarding second quarter production and sales when the
Company reports quarterly results on July 25, 2018, followed by a
conference call and webcast on July 26 at 8:00 am ET. The following
table includes preliminary gold and copper production and sales
results from our operations:
|
Three months ended June 30, 2018 |
Six months ended June 30, 2018 |
|
Production |
Sales |
Production |
Sales |
Gold (equity ounces (000s)) |
Barrick Nevada4 |
464 |
444 |
935 |
906 |
Pueblo Viejo (60%) |
123 |
125 |
264 |
273 |
Lagunas Norte |
65 |
65 |
131 |
134 |
Veladero (50%)5 |
78 |
82 |
152 |
156 |
Turquoise Ridge
(75%) |
69 |
58 |
115 |
121 |
Acacia (63.9%) |
86 |
85 |
163 |
160 |
Kalgoorlie (50%) |
96 |
99 |
181 |
182 |
Porgera (47.5%) |
41 |
34 |
81 |
79 |
Hemlo |
38 |
37 |
78 |
81 |
Golden Sunlight |
7 |
8 |
16 |
16 |
Total Gold |
1,067 |
1,037 |
2,116 |
2,108 |
|
|
|
|
|
Copper (equity pounds (millions)) |
Lumwana |
47 |
45 |
95 |
92 |
Zaldívar (50%) |
23 |
21 |
47 |
45 |
Jabal
Sayid (50%) |
13 |
8 |
26 |
22 |
Total Copper |
83 |
74 |
168 |
159 |
INVESTOR CONTACTDeni
NicoskiSenior Vice PresidentInvestor RelationsTelephone:
+1 416 307-7474Email: dnicoski@barrick.com
MEDIA CONTACTAndy
Lloyd Senior Vice PresidentCommunicationsTelephone: +1 416
307-7414Email: alloyd@barrick.com
TECHNICAL INFORMATIONThe
scientific and technical information contained in this press
release has been reviewed and approved by Geoffrey Locke, P. Eng.,
Manager, Metallurgy of Barrick who is a “Qualified Person” as
defined in National Instrument 43-101 – Standards of Disclosure for
Mineral Projects.
SECOND QUARTER 2018
RESULTSBarrick will release its Second Quarter 2018
Results on July 25, 2018, followed by a conference call and webcast
on July 26 at 8:00 am ET.
Toll Free (U.S. and Canada):
1-800-319-4610International: +1 416 915-3239
The webcast and presentation materials will be
available on Barrick’s website. The conference call will be
available for replay by phone at 1-855-669-9658 (U.S. and Canada
toll free), and +1 604 674-8052 (international), access code
2352.
ENDNOTE 1Cost of sales
applicable to gold per ounce is calculated using cost of sales
applicable to gold on an attributable basis (removing the
non-controlling interest of 40% Pueblo Viejo and 36.1% Acacia from
cost of sales), divided by attributable gold ounces. Cost of sales
applicable to copper per pound is calculated using cost of sales
applicable to copper including our proportionate share of cost of
sales attributable to equity method investments (Zaldívar and Jabal
Sayid), divided by consolidated copper pounds (including our
proportionate share of copper pounds from our equity method
investments).
ENDNOTE 2Cash costs per ounce
and all-in sustaining costs per ounce are non-GAAP financial
measures which are calculated based on the definition published by
the World Gold Council (“WGC”) (a market development organization
for the gold industry comprised of and funded by 24 gold mining
companies from around the world, including Barrick). The WGC is not
a regulatory organization. Management uses these measures to
monitor the performance of our gold mining operations and its
ability to generate positive cash flow, both on an individual site
basis and an overall company basis.
Cash costs start with our cost of sales related
to gold production and removes depreciation, the non-controlling
interest of cost of sales and includes by-product credits. All-in
sustaining costs start with cash costs and include sustaining
capital expenditures, general and administrative costs,
minesite exploration and evaluation costs and reclamation cost
accretion and amortization. These additional costs reflect the
expenditures made to maintain current production levels.
We believe that our use of cash costs and all-in
sustaining costs will assist analysts, investors and other
stakeholders of Barrick in understanding the costs associated with
producing gold, understanding the economics of gold mining,
assessing our operating performance and also our ability to
generate free cash flow from current operations and to generate
free cash flow on an overall company basis. Due to the
capital-intensive nature of the industry and the long useful lives
over which these items are depreciated, there can be a significant
timing difference between net earnings calculated in accordance
with IFRS and the amount of free cash flow that is being generated
by a mine and therefore we believe these measures are useful
non-GAAP operating metrics and supplement our IFRS disclosures.
These measures are not representative of all of our cash
expenditures as they do not include income tax payments, interest
costs or dividend payments. These measures do not include
depreciation or amortization.
Cash costs per ounce and all-in sustaining costs
are intended to provide additional information only and do not have
standardized definitions under IFRS, and should not be considered
in isolation or as a substitute for measures of performance
prepared in accordance with IFRS. These measures are not equivalent
to net income or cash flow from operations as determined under
IFRS. Although the WGC has published a standardized definition,
other companies may calculate these measures differently.
C1 cash costs per pound and all-in sustaining
costs per pound are non-GAAP financial measures related to our
copper mine operations. We believe that C1 cash costs per pound
enables investors to better understand the performance of our
copper operations in comparison to other copper producers who
present results on a similar basis. C1 cash costs per pound
excludes royalties and non-routine charges as they are not direct
production costs. All-in sustaining costs per pound is similar to
the gold all-in sustaining costs metric and management uses this to
better evaluate the costs of copper production. We believe this
measure enables investors to better understand the operating
performance of our copper mines as this measure reflects all of the
sustaining expenditures incurred in order to produce copper. All-in
sustaining costs per pound includes C1 cash costs, corporate
general and administrative costs, minesite exploration and
evaluation costs, royalties, environmental rehabilitation costs and
write-downs taken on inventory to net realizable value.
Barrick will provide a full reconciliation of
our final non-GAAP financial measures when the Company reports its
quarterly results on July 25, 2018.
ENDNOTE 32018 guidance is based
on gold, copper, WTI oil price and Brent oil price assumptions of
$1,200/oz, $2.75/lb, $65/bbl and $70/bbl respectively, a USD:AUD
exchange rate of 0.75:1, a CAD:USD exchange rate of 1.25:1, a
ARS:USD exchange rate of 18.35:1 and a CLP:USD exchange rate of
650:1.
ENDNOTE 4Includes our 60%
equity share of South Arturo.
ENDNOTE 5Reflects our 50%
equity share of Veladero.
CAUTIONARY STATEMENTS REGARDING
PRELIMINARY SECOND QUARTER PRODUCTION, SALES AND COSTS FOR 2018 AND
FORWARD-LOOKING INFORMATIONBarrick cautions that, whether
or not expressly stated, all second quarter figures contained in
this press release including, without limitation, production levels
and sales and associated costs (including, costs of sales per ounce
for gold and per pound for copper, all-in sustaining costs per
ounce/pound, cash costs per ounce, and C1 cash costs per pound) are
preliminary and reflect our expected second quarter results as of
the date of this press release. Actual reported second quarter
production levels and sales and associated costs are subject to
management’s final review, as well as review by the Company’s
independent accounting firm, and may vary significantly from those
expectations because of a number of factors, including, without
limitation, additional or revised information, and changes in
accounting standards or policies, or in how those standards are
applied. Barrick will provide additional discussion and analysis
and other important information about its second quarter production
levels and sales and associated costs when it reports actual
results on July 25, 2018. For a complete picture of the Company’s
financial performance, it will be necessary to review all of the
information in the Company’s second quarter financial report and
related MD&A. Accordingly, readers are cautioned not to rely
solely on the information contained herein.
Finally, Barrick cautions that this press
release contains forward-looking statements with respect to (i)
Barrick’s forward-looking production guidance; (ii) estimates of
future cost of sales per ounce for gold and per pound for copper,
all-in sustaining costs per ounce/pound, cash costs per ounce, and
C1 cash costs per pound; and (iii) expectations regarding
operations during the second half of 2018 at Barrick Nevada, Pueblo
Viejo, Porgera and Lumwana.
Forward-looking statements are necessarily based
upon a number of estimates and assumptions including material
estimates and assumptions related to the factors set forth below
that, while considered reasonable by the Company as at the date of
this press release in light of management’s experience and
perception of current conditions and expected developments, are
inherently subject to significant business, economic and
competitive uncertainties and contingencies. Known and unknown
factors could cause actual results to differ materially from those
projected in the forward-looking statements, and undue reliance
should not be placed on such statements and information. Such
factors include, but are not limited to: fluctuations in the spot
and forward price of gold, copper, or certain other commodities
(such as silver, diesel fuel, natural gas, and electricity); the
speculative nature of mineral exploration and development; changes
in mineral production performance, exploitation, and exploration
successes; risks associated with the fact that certain
Best-in-Class initiatives are still in the early stages of
evaluation, and additional engineering and other analysis is
required to fully assess their impact; risks associated with the
ongoing implementation of Barrick’s digital transformation
initiative, and the ability of the projects under this initiative
to meet the Company’s capital allocation objectives; the duration
of the Tanzanian ban on mineral concentrate exports; the ultimate
terms of any definitive agreement between Acacia and the Government
of Tanzania to resolve a dispute relating to the imposition of the
concentrate export ban and allegations by the Government of
Tanzania that Acacia under-declared the metal content of
concentrate exports from Tanzania and related matters; whether
Acacia will approve the terms of any final agreement reached
between Barrick and the Government of Tanzania with respect to the
dispute between Acacia and the Government of Tanzania; the benefits
expected from recent transactions being realized; diminishing
quantities or grades of reserves; increased costs, delays,
suspensions and technical challenges associated with the
construction of capital projects; operating or technical
difficulties in connection with mining or development activities,
including geotechnical challenges and disruptions in the
maintenance or provision of required infrastructure and information
technology systems; failure to comply with environmental and health
and safety laws and regulations; timing of receipt of, or failure
to comply with, necessary permits and approvals; uncertainty
whether some or all of the Best-in-Class initiatives, targeted
investments and projects will meet the Company’s capital allocation
objectives and internal hurdle rate; the impact of global liquidity
and credit availability on the timing of cash flows and the values
of assets and liabilities based on projected future cash flows; the
impact of inflation; fluctuations in the currency markets; changes
in national and local government legislation, taxation, controls or
regulations and/ or changes in the administration of laws, policies
and practices, expropriation or nationalization of property and
political or economic developments in Canada, the United States,
and other jurisdictions in which the Company or its affiliates do
or may carry on business in the future; lack of certainty with
respect to foreign legal systems, corruption and other factors that
are inconsistent with the rule of law; damage to the Company’s
reputation due to the actual or perceived occurrence of any number
of events, including negative publicity with respect to the
Company’s handling of environmental matters or dealings with
community groups, whether true or not; the possibility that future
exploration results will not be consistent with the Company’s
expectations; risks that exploration data may be incomplete and
considerable additional work may be required to complete further
evaluation, including but not limited to drilling, engineering and
socioeconomic studies and investment; risk of loss due to acts of
war, terrorism, sabotage and civil disturbances; litigation and
legal and administrative proceedings; contests over title to
properties, particularly title to undeveloped properties, or over
access to water, power and other required infrastructure; business
opportunities that may be presented to, or pursued by, the Company;
our ability to successfully integrate acquisitions or complete
divestitures; risks associated with working with partners in
jointly controlled assets; employee relations including loss of key
employees; increased costs and physical risks, including extreme
weather events and resource shortages, related to climate change;
and availability and increased costs associated with mining inputs
and labor. In addition, there are risks and hazards associated with
the business of mineral exploration, development and mining,
including environmental hazards, industrial accidents, unusual or
unexpected formations, pressures, cave-ins, flooding and gold
bullion, copper cathode or gold or copper concentrate losses (and
the risk of inadequate insurance, or inability to obtain insurance,
to cover these risks).
Many of these uncertainties and contingencies
can affect our actual results and could cause actual results to
differ materially from those expressed or implied in any
forward-looking statements made by, or on behalf of, us. Readers
are cautioned that forward-looking statements are not guarantees of
future performance. All of the forward-looking statements made in
this press release are qualified by these cautionary statements.
Specific reference is made to the most recent Form 40-F/Annual
Information Form on file with the SEC and Canadian provincial
securities regulatory authorities for a more detailed discussion of
some of the factors underlying forward-looking statements and the
risks that may affect Barrick’s ability to achieve the expectations
set forth in the forward-looking statements contained in this press
release.
Barrick disclaims any intention or obligation to
update or revise any forward-looking statements whether as a result
of new information, future events or otherwise, except as required
by applicable law.
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