TORONTO (miningweekly.com) – Chief gold producer Barrick Gold has delivered a strong financial performance during the first quarter, doubling headline earnings and beating stock market forecasts; all the while making good progress on strategic objectives despite a 7.9% decline in output.

The Toronto-based company, whose stock is quoted both on the TSX and NYSE, reported headline net earnings for the three months ended March 31 of $127-million, or $0.11 a share, beating earnings forecasts by $0.01 and rising from $62-million or $0.05 a share over the comparable period of 2015.

Barrick reported a net loss of $83-million, or $0.07 a share, in the first quarter, down from earnings of $57-million, or $0.05 a share a year earlier.

Despite Barrick’s output declining in the quarter by 110 000 oz to 1.28-million ounces, all-in sustaining costs (AISC) fell 24% to $706/oz in the quarter. When excluding in the impact of divested mines, gold production for the quarter actually increased, driven by higher production at Cortez, Goldstrike, and Pueblo Viejo, Barrick reported.

The company expected to hit full-year output ranging between 5-million and 5.5-million ounces of gold at lower AISC of $760/oz to $810/oz. Barrick had lowered its AISC guidance from its original guidance of $775/oz to $825/oz, reflecting the impact of lower fuel costs, favourable foreign exchange rates, and early best-in-class productivity and efficiency initiatives, the company advised.

STRONG CASH FLOW
Barrick had started delivering on its 2016 priorities, by making progress on lowering its free cash flow breakeven gold price to $1 000/oz, reducing total debt by $2-billion, implementing best-in-class practice to improve efficiency and productivity across all operations, and maintaining strict capital discipline.

The company generated $181-million in free cash flow in the first quarter, marking four consecutive quarters of positive free cash flow.

Year to date the company had reduced total debt by $842-million, representing 42% of its full-year target. It had been selling noncore assets and funding repayments from free cash flows.

The company’s formidable liquidity position continued to improve, underpinned by stronger free cash flow generation across the business, and modest near-term debt repayment obligations. At the end of the first quarter, Barrick had a consolidated cash balance of about $2.3-billion. The company had less than $200-million in debt due before 2018, and about $5-billion of its outstanding debt of $9.1-million did not mature until after 2032.

In the medium term, Barrick advised it would aim to reduce the debt level to below $5-billion. The company's total debt fell to $9.1-billion at the end of March from $10-billion at the end of December.

Since the start of 2015, Barrick gad reduced total debt by $3.95-billion, or roughly 30%, the company stated. This was expected to reduce our interest payments by about $180-million on an annualised basis.

Meanwhile, the company had formed a new ‘growth group’ of senior managers to act as a central clearing house to ensure strategic alignment and appropriate coordination of all major growth initiatives across the company. The group was tasked to develop and advance strategies that will grow free cash flow per share over the long-term.

Barrick’s stock had more than doubled since the start of the year, to $16.49 apiece on the NYSE on Tuesday.