TORONTO (miningweekly.com) – It was smiles all around on Wednesday, as Barrick Gold – newly freed from its gold hedges and boasting higher production and lower cost numbers – published first-quarter results and hosted its annual shareholder meeting in downtown Toronto.

The world's biggest gold miner posted record earnings for the first quarter, and said it expects to meet earlier forecasts for production and costs this year, both of which are expected to improve compared with 2009.

Output will likely be at similar levels in 2011, and costs will be flat or potentially slightly higher because of inflationary pressure, CEO Aaron Regent said.

But the broader trend for costs is definitely heading lower, thanks to large new mines the company is building and ramping up, he told reporters after the AGM.

“The cost trend is reversing,” Regent affirmed.

The news will be welcomed by shareholders, after gold miners watched the benefits of rising metal prices in 2006 and 2007 nibbled away by costs that seemed to grow almost as fast.

Barrick also had some good news on its billion-dollar development projects, all of which are tracking within budget and on schedule, it said on Wednesday.

These large new mines are the key to the gold miner's plan to bring overall group costs down.

The company has completed construction of its Cortez Hills mine, in Nevada, where a US district court said earlier this month that Barrick could continue mining, while court-ordered environmental assessments are under way.

Cortez Hills was a big contributor to the company's strong production performance in the first quarter, Regent said.

The company is also making progress at its three South American projects, including having signed a $1-billion project finance agreement, on a 100% basis, for the Pueblo Viejo mine in the Dominican Republic.

Barrick owns 60% of the project and fellow Canadian Goldcorp holds the balance.

The $3-billion mine is expected to start production before the end of next year, and will add about 625 000 to 675 000 oz of gold a year to Barrick's account in the first five years of operation, at total cash costs of just between $250/oz and $275/oz.

Regent said the company is not concerned by renewed criticism in the Dominican Republic of the special lease agreement the company signed with the government for the Pueblo Viejo project.

“The project has been somewhat politicised in this election cycle,” he commented.

After Pueblo Viejo, which will operate for at least 25 years based on current reserves, the next giant mine expected to start production for Barrick is the Pascua Lama project on the border of Chile and Argentina.

Pascua Lama also has a price tag of around $3-billion, with output scheduled to begin about two years after Pueblo Viejo, in the third quarter of 2013.

Detailed engineering for the mine is about 95% completed and the project is on budget, with about one third of the capital committed, Regent said.

Barrick has said it expects to be ready for a construction decision on the next project in its pipeline – the Cerro Casale mine in Chile – before the end of next year.

The company owned 50% of the project until this year, and has now bought another 25% from partner Kinross Gold.

Cerro Casale also has a hefty price tag, weighing in at $4,2-billion.

Regent said that a selection process is has begun for an engineering, procurement and construction management contractor to advance basic engineering.

CORPORATE ACTIVITY

Regent said the company continues to monitor the industry for potential acquisitions, but that any deal would need to compete with the projects already in its pipeline.

The firm would favour large, low-cost assets, and is probably more interested at the moment in early stage projects, he said, adding that nothing is ruled out.

“There are opportunities out there, yes. It's a question of doability, a question of valuation,” Regent said.

There has been some speculation that Barrick might be a candidate for the role of white knight to Australia's Lihir Gold, but he declined to comment on any specifics.

The company will also continue to evaluate its own portfolio to potentially divest of “less core” assets, but there are no plans at the moment for any asset sales.

Just because an asset is smaller, does not mean Barrick wants to get rid of it, he added.

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