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Barrick Gold misses Q1 earnings forecast, to sell Chile copper mine

Barrick Gold misses Q1 earnings forecast, to sell Chile copper mine

Photo by Bloomberg

28th April 2015

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – The world’s largest gold producer by output Barrick Gold has missed Wall Street analyst’s average first-quarter earnings forecast, as lower metals prices and lower sales impacted the bottom line.

For the three months ended March 31, TSX- and NYSE-listed Barrick reported net earnings of $57-million, or $0.05 a share, compared with $88-million, or $0.08 a share, in the same period last year. Operating cash flow in the period was $316-million compared with $585-million in the first quarter of 2014.

Adjusted to remove special items, net earnings for the quarter were $62-million, or $0.05 a share, compared with $238-million, or $0.20 a share, a year earlier.

Analysts had on average expected adjusted earnings of $0.09 a share, on revenue of $2.38-billion.

Revenues declined 15% year-over-year to $2.25-billion. This was the result of a 14% drop in gold sales at 1.4-million ounces, while the average realised sales price for gold dropped 5% to $1 219/oz and 16% for copper, at $2.55/lb.

In the first quarter, gold output was 12% lower at 1.4-million ounces, compared with the same period last year, mainly owing to lower output at the Cortez and Goldstrike mines, in Nevada, as well as the impact of 2014 asset sales.

DEBT REDUCTION
Barrick stressed that it remained committed to its debt reduction target of at least $3-billion by the end of the year, announcing that it had started a process for selling a stake in the Zaldívar copper mine, in Chile.

The company said Zaldívar was a consistently strong performer in the world's best jurisdiction for copper mining and potential buyers had expressed a strong interest in acquiring an interest in the mine.

Several other companies had also participated in the sales processes for the Cowal mine, in Australia, and the Porgera joint venture, in Papua New Guinea.

Barrick explained that its strong liquidity meant it could proceed with these and other transactions with patience and discipline, having less than $900-million in debt due over the next three years, a $4-billion undrawn credit facility and $2.3-billion in cash in the bank at the end of the quarter.

The company’s total liabilities as at March 31 were $20.7-billion.

Barrick confirmed its gold output guidance for 2015 at between 6.2-million ounces and 6.6-million ounces, with output 55% weighted to the second half of the year, according to plan. Costs were also expected to be 20% lower in the second half of the year, with full-year all-in sustaining costs expected to be between $860/oz and $895/oz.

Barrick recently announced that the Lumwana mine would continue operating after the government of Zambia announced a new tax system. The company lifted its copper output guidance for the year to between 480-million pounds and 520-million pounds, with C1 cash costs unchanged at $1.75/lb to $2/lb.

NEW DISCOVERY
About 85% of the company's $220-million to $260-million exploration budget this year was allocated to the Americas, where its teams had uncovered some of the largest gold discoveries in recent decades, including the Lagunas Norte deposit, in Peru, and the Goldrush deposit.

Barrick revealed on Monday that it had made another significant new gold discovery known as Alturas, located in the Andean region, of Chile, about 30 km south of the former El Indio mine.

Alturas was part of a large mineralised system that extended well beyond the limits of the current drilling area. To date, 35 core holes had been completed in a 1 km2 area.

Mineralisation appeared to be oxide in nature and geologically similar to the ten-million-ounce Veladero mine, with the potential to be significantly higher grade.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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