https://www.miningweekly.com

Barrick takes $405m write-down on Peru mine, adjusted earnings fall

25th October 2018

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online

     

Font size: - +

Gold major Barrick Gold, which has agreed to a $6.1-billion deal to buy Randgold Resources, has posted a third-quarter net loss of $412-million, or $0.35 a share, reflecting a $405-million impairment charge at the Lagunas Norte mine, in Peru.

The net loss is significantly wider than the $11-million loss reported in the prior-year period.

Adjusted net earnings also decreased, from $200-million in the third quarter of 2017, to $89-million, or $0.08 a share, in the quarter under review, but managed to beat analyst expectations. The average estimate of 14 analysts was that Barrick will report adjusted earnings of $0.05 a share.

Revenue fell from $1.99-billion in the September 2017 quarter, to $1.84-billion in the September 2018 quarter, on lower realised gold and copper prices.

Barrick produced 1.15-million ounces of gold in the third quarter, at a cash cost of sales of $50/oz, all-in sustaining costs (AISC) of $785/oz and cash costs of $587/oz gold. Gold production was lower than the comparable quarter in 2017, but higher than the preceding quarter, owing to improved throughput and grade at Barrick Nevada.

The group’s production guidance for the fourth quarter is 1.25-million ounces and it stated that production for the full year would be at the lower end of its guidance range of 4.5-million to 5-million ounces of gold. Its AISC guidance remains unchanged at $765/oz to $815/oz .

AISC for gold increased by 2% year-on-year, which Barrick attributed to higher direct mining costs.

Copper production decreased to 106-million pounds, from 115-million pounds in the third quarter of 2017, at cost of sales of $2.18/lb, AISC of $2.71/lb and cash costs of $1.94/lb. Barrick said that copper costs increased on a year-on-year basis as a result of the impact of lower sales volumes and higher direct mining costs.

The group’s copper production guidance is 345-million to 410-million pounds at an AISC of $2.55/lb to $2.85/lb for the full year.

Meanwhile, Barrick explained the $405-million asset impairment charge, saying that it had decided to pull the plug on a project to treat refractory sulphide ore (PMR) at its Lagunas Norte mine. The company has been studying the potential of the PMR project, as well as the processing of carbonaceous materials (CMOP) as a way of extending the mine life. The group has decided to advance the CMOP project to detailed engineering.

The miner also reported that its organic growth projects in Nevada and the Dominican Republic continued to advance.

At the $1-billion Goldrush project, in Nevada, decline construction is under way. The exploration twin declines would provide access to the orebody at depth and would allow for further exploration and to convert existing resources to reserves. The mine has proven and probable gold reserves of 1.5-million ounces and measured and indicated resources of 9.4-million ounces.

When in full operation, the Goldrush underground projects would produce about 500 000 oz/y of gold at an AISC of $640/oz. Barrick has spent about $33-million out of the total capital estimate of $1-billion for the project.

At Cortez South Deep, Nevada, the expansion project’s draft environmental impact statement is currently open for public scrutiny. The project, which will cost $106-million, will add 300 000 oz/y of gold production between 2024 and 2018, at an AISC of $580/oz.

In the Dominican Republic, the Pueblo Viejo joint venture operation is studying plant expansion opportunities. Barrick is advancing prefeasibility studies to increase throughput by 50% to 12-million tonnes a year, allowing the mine to maintain output at 800 000 oz/y after 2022.

The project has the potential to convert about seven-million ounces of measured and indicated resources to proven and probable reserves.

Barrick reported that the pilot pre-oxidation heap leach pad was in operation, and construction of the pilot flotation circuit was well advanced, including the holding tank and thickener. Both pilots would test metallurgy and recoveries in support of the prefeasibility study for the project.

Edited by Creamer Media Reporter

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION