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Barrick Reports $405 Million Impairment Charge In Q3 Earnings

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(Kitco News) - Barrick Gold Corp. (NYSE: ABX, TSX: ABX) late Wednesday reported a net loss of $412 million, or 35 cents per share, compared to a loss $11 million, or a penny, in the third quarter of 2017.

The July-September net loss was mostly due to a $405 million impairment charge at the Lagunas Norte mine in Peru, the company said. There were also several other special items, including a $62 million foreign-currency-translation loss due to weakening of the Argentine peso.

In total, the company said that adjusted net earnings for the fourth quarter that were lower than a year ago as the prices of metals fell.

Excluding special items, Barrick reported an adjusted profit of $89 million, or 8 cents per share, down from $200 million, or 17 cents, in September 2017. The company said the decline is primarily the result of lower gold and copper prices, increased direct mining costs due to higher fuel consumption and prices, and planned maintenance at Pueblo Viejo.

The average realized gold price fell to $1,216 an ounce from $1,274 in the year-ago period, while copper prices fell to $2.76 a pound from $3.05, a decline of 4.5% and 9.5% respectively.

Late in the quarter, the company announced an agreement for Barrick to acquire Randgold Resources Ltd. (Nasdaq: GOLD) in an all-stock merger to create the largest gold producer in the world. Since the proposed merger was announced, Barrick and Randgold shares have risen by 25% and 28%, respectively, creating $4.8 billion in combined market value, Barrick reported. A special meeting of Barrick shareholders will be held on Nov. 5 to approve the issuance of Barrick common shares for the acquisition of Randgold.

Barrick produced 1.15 million ounces of gold in the third quarter of 2018 at all-in sustaining costs of $785 per ounce. The company produced 106 million pounds of copper in the third quarter at AISC of $2.71 per pound.

Officials said Barrick remains on track to meet its full-year gold and copper production guidance. The company expects gold output of 4.5 million to 5 million ounces at AISC of $765 to $815 per ounce, with projected production of some 1.25 million ounces in the fourth quarter. Full-year guidance for copper production is in the range of 345 million to 410 million pounds at AISC of $2.55 to $2.85 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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