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Barrick Posts 3Q Net Loss, Smaller Adjusted Profit On Lower Output

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(Kitco News) - Barrick Gold Corp. (NYSE, TSX: ABX) said Wednesday that the company reversed to a net loss in the third quarter and had a smaller adjusted profit as production fell from the same period a year ago.

The net loss was $11 million, or a penny per share, a turnaround from net earnings of $175 million, or 15 cents, in the prior-year period. The decrease primarily reflects lower gold production and lower gold prices, as well as the impact of Tanzania's concentrate export ban on Acacia Mining, of which Barrick is majority owner, the company said. Net earnings were also impacted by a tax provision of $172 million related to the proposed framework for Acacia's operations in Tanzania.

Excluding special items, Barrick listed adjusted net earnings for the third quarter of $186 million, or 16 cents per share, down from $278 million, or 24 cents, in the prior-year period.

Barrick also announced that its board of directors maintained a quarterly dividend 3 cents per share, payable on Dec. 15 to shareholders of record at the close of business on Nov. 30.

Gold production in the third quarter, which was pre-released earlier this month, was 1.24 million ounces, down from 1.38 in the same period a year ago. All-in sustaining costs were put at $772 per ounce, compared to $704 per ounce in the third quarter of 2016.

Officials continued to tout debt-reduction efforts, reporting that the company has reduced total debt by nearly $1.5 billion so far this year, slightly exceeding a target of $1.45 billion. During the third quarter, the company completed the redemption of approximately $731 million of May 2023 notes and fully repaid the amounts outstanding on the Pueblo Viejo project financing agreement.

“Our goal is to reduce our total debt to $5 billion by the end of 2018, using cash flow from operations, and through further portfolio optimization, including potential divestments and the creation of new joint ventures and partnerships,” Barrick said in its earnings report. “The company will continue to pursue debt reduction with discipline, taking only those actions that make sense for the business, on terms we consider favorable to our shareholders.”

Barrick ended the quarter with a cash balance of some $2 billion. The company said it has less than $100 million in debt due before 2020, and three-quarters of outstanding debt of $6.4 billion does not mature until after 2032.

Barrick narrowed its 2017 gold production and cost guidance ranges. The company now looks for full-year gold production to be between 5.3 million and 5.5 million ounces, at a cost of sales of $790 to $810 per ounce and AISC of $740 to $770 per ounce. Previously, the guidance range was of 5.3 million to 5.6 million ounces, at a cost of sales of $780 to $820 per ounce, and all-in sustaining costs of $720 to $770 per ounce.

Barrick produced 115 million pounds of copper in the third quarter at AISC of $2.24 per pound. This compares to 100 million pounds at AISC of $2.02 per pound in the third quarter of 2016.

The full-year copper-production guidance range has narrowed to 420 million to 440 million pounds. The copper AISC guidance range was narrowed to $2.20 to $2.40 per pound.

“We allocated more capital to our pipeline of low risk, organic projects, located at or near Barrick's core operations,” the company said. “These projects have the potential to contribute more than 1 million ounces of annual production to Barrick, beginning in 2020.”

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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