Barrick Gold Corporation (NYSE:GOLD)(TSX:ABX) (“Barrick” or the
“Company”) said today its full-year production was continuing to
trend towards the upper end of the 5.1 to 5.6 million ounce
guidance range while costs were likely to be at the lower end of
the forecast.
Commenting on the group’s preliminary production
results for the third quarter, president and chief executive Mark
Bristow said another strong performance across the portfolio
reflected the progress management had made in rebuilding a new,
value-focused Barrick since the merger with Randgold at the
beginning of the year.
The third quarter results, which include the
impact of the Nevada Gold Mines joint venture established on 1
July, show preliminary third quarter sales of 1.32 million ounces
of gold and 64 million pounds of copper, as well as preliminary
third quarter production of 1.31 million ounces of gold and 111
million pounds of copper. The average market price for gold
in the third quarter was $1,472 per ounce, while the average market
price for copper in the third quarter was $2.63 per pound.
Preliminary gold sales and production were
slightly below second quarter levels as North Mara in Tanzania was
affected by operational restrictions that were in place for most of
the third quarter but were lifted by quarter-end. Third quarter
gold cost of sales per ounce1 is expected to be approximately
11-13% higher than the second quarter, primarily due to higher
depreciation resulting from purchase price adjustments at Nevada
Gold Mines. A quarter-over-quarter increase in total cash costs per
ounce2 and gold all-in sustaining costs per ounce2 of approximately
8-10% and 12-14% respectively, is expected, in line with guidance
for the year.
Preliminary third quarter copper production was
higher than the second quarter of the year, primarily as a result
of higher production at Lumwana. Preliminary third quarter
copper sales were lower than production levels due to a major
refurbishment at one of the third-party smelters that processes a
portion of the concentrate produced by Lumwana. The refurbishment
is expected to be completed by the end of this year. We continue to
evaluate alternative smelter opportunities during this maintenance
period. Third quarter copper cost of sales per pound1 are expected
to be in line with the prior quarter and C1 cash costs per pound2
are expected to be 2-4% higher than the second quarter. As a result
of the lower sales volumes, copper all-in sustaining costs per
pound2 are expected to increase 13-15% quarter-over-quarter.
The 2019 copper production and cost guidance is unchanged.
Barrick will provide additional discussion and
analysis regarding its third quarter production and sales when the
Company reports its quarterly results before North American markets
open on November 6, 2019. President and CEO Mark Bristow will
host a live presentation on the results in London, UK, at 14:00 UTC
(GMT) / 09:00 EST on that day. The presentation will be
linked to a webcast and conference call.
The following table includes preliminary gold
and copper production and sales results from Barrick’s
operations:
|
Three months ended September 30, 2019 |
|
Production |
Sales |
Gold (equity ounces (000s)) |
Carlin3 (61.5%) |
278 |
272 |
Cortez (61.5%) |
126 |
126 |
Turquoise Ridge4 (61.5%) |
82 |
96 |
Phoenix (61.5%) |
25 |
19 |
Long Canyon (61.5%) |
24 |
24 |
Nevada Gold Mines (61.5%) |
535 |
537 |
Loulo-Gounkoto (80%) |
153 |
155 |
Pueblo Viejo (60%) |
139 |
136 |
Kibali (45%) |
91 |
89 |
Porgera (47.5%) |
75 |
75 |
Tongon (89.7%) |
62 |
66 |
Tanzania5 (63.9%) |
53 |
59 |
Veladero (50%) |
58 |
59 |
Kalgoorlie (50%) |
58 |
58 |
Hemlo |
49 |
50 |
Lagunas Norte |
33 |
33 |
Total Gold |
1,306 |
1,317 |
|
|
|
Copper (equity pounds
(millions)) |
Lumwana |
65 |
24 |
Zaldívar (50%) |
31 |
25 |
Jabal Sayid (50%) |
15 |
15 |
Total
Copper |
111 |
64 |
Enquiries:
Investor & Media Relations Kathy du Plessis Tel/mobile:
+44 20 7557 7738 barrick@dpapr.com |
Website:
www.barrick.com
Technical Information
The scientific and technical information
contained in this news release has been reviewed and approved by:
Steven Yopps, MMSA, Barrick’s Director - Metallurgy, North America;
Chad Yuhasz, P.Geo, Barrick’s Mineral Resource Manager, Latin
America and Australia Pacific; and Simon Bottoms, CGeol, Barrick's
Mineral Resources Manager, Africa and Middle East – each a
“Qualified Person” as defined in National Instrument 43-101 –
Standards of Disclosure for Mineral Projects.
Third Quarter 2019 Results
Barrick will release its Third Quarter 2019
Results before market open on November 6, 2019.
President and CEO Mark Bristow will host a live presentation
on the results in London, UK, at 14:00 UTC (GMT) / 09:00 EST on
that day. The presentation will be linked to a webcast and
conference call.
US and Canada, 1 800 319 4610UK, 0808 101
2791International, +1 416 915 3239Webcast
If you wish to attend the presentation in
London, please contact Kathy du Plessis at barrick@dpapr.com. The
Q3 2019 presentation materials will be available on Barrick’s
website at www.barrick.com.
The webcast will remain on the website for later
viewing, and the conference call will be available for replay by
telephone at 1 855 669 9658 (US and Canada) and +1 604 674 8052
(international), access code 3682.
Endnote 1
Cost 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, 36.1% Tanzania, 40% South Arturo, 20% Loulo-Gounkoto
and 10.3% of Tongon and including our proportionate share of cost
of sales attributable to equity method investments (Kibali and
Morila) in cost of sales), divided by attributable gold ounces. The
non-controlling interest of 38.5% Nevada Gold Mines is also removed
from cost of sales from July 1, 2019 onwards. 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 2
Total cash costs per ounce, all-in sustaining
costs per ounce and all-in costs per ounce are non-GAAP financial
measures which are calculated based on the definition published by
the World Gold Council (a market development organization for the
gold industry comprised of and funded by 26 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.
Total 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 total cash costs and
include sustaining capital expenditures, sustaining leases,
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.
Starting from the first quarter of 2019, we have
renamed "cash costs" to "total cash costs" when referring to our
gold operations. The calculation of total cash costs is
identical to our previous calculation of cash costs with only a
change in the naming convention of this non-GAAP measure.
Starting from the first quarter of 2019, we have
included sustaining capital expenditures and project capital
expenditures on a cash basis instead of an accrual basis. As a
result of adopting IFRS 16 Leases, the full lease amount is
included in accrued capital expenditures on initial recognition. We
believe that the change in capital expenditures from an accrual
basis to a cash basis better reflects the timing of costs
associated with our operations. The original World Gold Council
("WGC") Guidance Note explicitly excluded certain financing
activities from all-in sustaining costs and all-in costs. As a
result of the new lease accounting standard, the WGC Guidance Note
was updated to include both the principal and interest portion of
the cash lease payment in the all-in sustaining costs and all-in
cost metrics. We have updated our calculation accordingly. Prior
periods have not been restated but would not be materially
different.
We believe that our use of total cash costs,
all-in sustaining costs and all-in 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.
Total cash costs per ounce, all-in sustaining
costs and all-in 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 production taxes 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, sustaining capital expenditures, sustaining leases,
general and administrative costs, minesite exploration and
evaluation costs, royalties and production taxes, reclamation cost
accretion and amortization and write-downs taken on inventory to
net realizable value.
Barrick will provide a full reconciliation of
these non-GAAP financial measures when the Company reports its
quarterly results on November 6, 2019.
Endnote 3
Includes Goldstrike and Nevada Gold Mines' 60%
equity share of South Arturo.
Endnote 4
Includes Twin Creeks.
Endnote 5
Formerly known as Acacia Mining plc.
Acacia's non-controlling shareholders were bought out by Barrick on
September 17, 2019. As a matter of convenience we have
accounted for Acacia on a 63.9% basis for the entire month of
September (which represents Barrick's equity share prior to the
completion of the transaction on September 17, 2019.)
Cautionary Statements Regarding
Preliminary Third Quarter Production, Sales and Costs for 2019, and
Forward-Looking Information
Barrick cautions that, whether or not expressly
stated, all third quarter figures contained in this press release
including, without limitation, production levels, sales and
associated costs are preliminary, and reflect our expected third
quarter results as of the date of this press release. Actual
reported third quarter production levels, 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
third quarter production levels and sales and associated costs when
it reports actual results on November 6, 2019. For a complete
picture of the Company’s financial performance, it will be
necessary to review all of the information in the Company’s third
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 production; (ii) costs per ounce for gold and per pound
for copper; and (iii) expected timing for completion of
refurbishments at one of the smelters that processes Lumwana
concentrate.
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 projects in the early stages of
evaluation, and for which additional engineering and other analysis
is required; 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; disruption of supply routes which may
cause delays in construction and mining activities at Barrick’s
more remote properties; whether benefits expected from recent
transactions are 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
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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