Barrick Reports 4Q Net Loss On Impairment But Adjusted Profit
The world’s largest gold producer listed a net loss of $314 million, or 27 cents per share, compared to a profit of $425 million, or 36 cents, in the same period a year ago. Adjusted net earnings were $253 million, or 22 cents, comparable to $255 million, also 22 cents, in the same period a year ago. According to news reports, adjusted earnings beat analyst expectations by a penny.
The company earlier this month announced that it would take a pre-tax $429 million impairment charge for the fourth quarter due to a reclassification of reserves at its Pascua-Lama project located on the border between Argentina and Chile.
Authorities have ordered closure of existing infrastructure on the Chilean side of the project as part of a re-evaluation process ordered by the country’s Environmental Court. Barrick is appealing the resolution, but nevertheless has said it will reclassify Pascua-Lama’s proven and probable gold reserves of approximately 14 million ounces, which are based on an open-pit mine plan, as measured and indicated resources.
Gold production in the fourth quarter was 1.34 million ounces, with all-in sustaining costs of $756 per ounce. The company produced 1.52 million ounces in the year-ago period at AISC of $732. The average realized gold price rose to $1,280 from $1,217. Copper production was 99 million pounds in the fourth quarter, with AISC of $2.51 per pound.
Barrick maintained a dividend of 3 cents per share, payable on March 15 to shareholders of record as of Feb. 28.
For full-year 2017, Barrick reported net earnings of $1.44 billion, or $1.23 per share, compared to $655 million, or 56 cents, in 2016. This improvement was primarily due impairment reversals and gains on sales related to the divestment of 50% of the Veladero mine and 25% of the Cerro Casale project, partially offset by net impairment charges at other operations, Barrick said. Adjusted net earnings increased by to $876 million, or 75 cents, in 2017 from $818 million, or 70 cents, in 2016.
Full-year gold production was 5.32 million ounces, with AISC of $750 per ounce. Copper production was 413 million pounds with AISC of $2.34 per pound.
Barrick said total debt was reduced by $1.51 billion, or 19%, in 2017 to $6.4 billion. “We intend to reduce total debt to around $5 billion by the end of 2018,” the company added.
Meanwhile, proven and probable gold reserves fell to 64.5 million ounces as of Dec. 31 from 86 million at the end of 2016, primarily reflecting the reclassification of Pascua-Lama reserves to resources, as well as divestments, the company said. However, exploration efforts enabled the company to more than replace the reserves it depleted through mining, Barrick said. Proven and probable copper reserves were 11.2 billion pounds as of year-end, including the addition of approximately 2.6 billion pounds at Lumwana.
Gold production guidance for 2018 was projected to fall to between 4.5 million and 5 million ounces, with all-in sustaining costs of $765 to $815 per ounce. Copper production guidance for 2018 was pegged at 385 million to 450 million pounds, with AISC of $2.30 to $2.60 per pound. For 2019 to 2022, Barrick said it expects average annual gold production to be between 4.2 million to 4.6 million ounces at AISC of $750 to $875.