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Barrick Gold 1Q Adjusted Profit Rises On Higher Gold Prices

Kitco News

(Kitco News) - Barrick Gold Corp. (NYSE, TSX: ABX) reported late Monday that first-quarter adjusted earnings rose from a year ago despite lower production, with the company’s profitability helped by higher gold prices.

Adjusted net earnings climbed 5% to $170 million, or 15 cents per share, from $162 million, or 14 cents, in the first quarter of 2017. According to news reports, this was slightly ahead of market expectations for earnings per share of 13 cents.

The company reported net earnings of $158 million, or 14 cents per share, for the January-March period, down from $679 million, or 58 cents, a year ago. However, the prior-year earnings were inflated by a net impairment reversal of $1.13 billion ($522 million after taxes and non-controlling interest), in connection with Barrick’s divestment of 25% of the Cerro Casale project.

The company said gold production and costs for the first quarter were in line with expectations. Barrick produced 1.05 million ounces of gold in the first quarter at all-in sustaining costs of $804 per ounce. In the year-ago quarter, output was 1.31 million ounces at AISC of $772 per ounce.

However, the amount of money that Barrick received per gold ounce rose to $1,332 per ounce from $1,220.

Barrick said the year-on-year output decline was expected due to the sale of 50% of the Veladero mine on June 30, 2017, lower throughput at Acacia as a result of reduced operations at Bulyanhulu, lower grades processed through the oxide mill and roaster at Barrick Nevada, and lower throughput and grades at Hemlo and Lagunas Norte. Also, an earthquake that damaged power infrastructure in Papua New Guinea also impacted production at Porgera.

Meanwhile, Barrick produced 85 million pounds of copper in the first quarter, down from 95 million in the year-ago period. AISC rose to $2.61 per pound from $2.19. However, the average realized price rose to $2.98 per pound from $2.76.

Barrick has cut its debt from $13.1 billion at the end of 2014 to $6.4 billion. The company envisions whittling this down some more.

“Our goal remains to reduce our total debt from $6.4 billion at present to around $5 billion by the end of 2018,” Barrick said in its earnings statement. “To achieve this, we will use cash flow from operations and cash on hand. Having materially strengthened the balance sheet, Barrick does not intend to sell further assets for the purposes of debt repayment.”

Any proceeds from additional any additional “portfolio optimization” will be reinvested to enhance the project pipeline or else returned to shareholders, Barrick said.

The company maintained its full-year guidance for gold production of 4.5 million to 5 million ounces at AISC of $765 to $815 per ounce.

“We expect gold production in the second quarter to be roughly in line with the first quarter at around 1 million ounces, mainly due to the impact of a scheduled maintenance shutdown at the Barrick Nevada roaster,” Barrick said.

The company maintained full-year copper production guidance of 385 million to 450 million pounds at AISC of $2.30 to $2.60 per pound.

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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