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VANCOUVER (miningweekly.com) – Canada’s Barrick Gold, the world’s largest gold producer by volume, announced on Wednesday that it has made significant progress on initiatives to repair its debt-laden balance sheet, declaring a higher dividend to shareholders and renewing its focus on exploration spending.
The Toronto-based miner reported better-than-expected earnings for the quarter ended December 31, with headline earnings of $255-million, or $0.22 a share, beating analyst estimates of earnings of $0.20 a share.
Net earnings totalled $425-million, or $0.36 a share, reflecting $146-million (net of tax effects and noncontrolling interests) in net impairment reversals, compared with impairment charges of $2.6-billion in the fourth quarter of 2015.
Fourth-quarter revenue climbed 3.6% year-over-year to $2.32-billion, derived from gold and copper sales of 1.52-million ounces and 107-million pounds, respectively. The increase in fourth-quarter revenue was owing to higher market prices for gold and copper, partially offset by lower gold and copper sales volumes.
Barrick increased its quarterly dividend to $0.03 a share, up from $0.02 a share.
DEBT REDUCTION
In 2016, Barrick reduced its debt by 20% to $2.04-billion, slightly exceeding its $2-billion target for the year.
The miner intends to reduce debt further by $2.9-billion, to $5-billion, by the end of 2018 – half of which is targeted for 2017. Barrick plans to achieve this goal by using cash flow from operations, selling more noncore assets and creating new joint ventures and partnerships.
At the end of the fourth quarter, Barrick had a consolidated cash balance of about $2.4-billion. It has less than $200-million in debt due before 2019. About $5-billion, or 63% of its outstanding total debt of $7.9-billion, does not mature until after 2032.
Since the end of 2014, Barrick has reduced its debt by 40%.
EXPLORATION
As at December 31, Barrick’s proven and probable gold reserves were 85.9-million ounces, compared with 91.9-million ounces at the end of 2015. Copper reserves, including copper within gold reserves, were 11.1-billion pounds at the end of 2016, compared with 11.7-billion pounds, at the end of 2015.
After several years of exploration focused mainly on existing core districts and projects, the company is increasing its budget and broadening its focus to include new greenfield opportunities.
About 80% of its total exploration budget of $185-million to $225-million is allocated to the Americas. Most of the remaining budget is allocated to its African subsidiary Acacia. Its exploration programmes will aim to balance high-quality brownfield projects, greenfield exploration and emerging discoveries that have the potential to become profitable mines, Barrick said.
The company’s five core mines, which are expected to account for about 70% of output in 2017, have an average reserve grade of 1.84 g/t – more than double that of its peer group average.
Barrick reported about 1.9-million ounces were divested last year, and 6.8-million ounces were depleted through mining and processing. Exploration replaced about 60% of the ounces depleted through drilling and cost improvements at operating mines. Significant additions included 1.1-million ounces at Lagunas Norte, 920 000 oz at Hemlo, and 640 000 oz at the Goldstrike underground mine.
For 2017, Barrick expects to produce between 5.6-million and 5.9-million ounces of gold, at an all-in sustaining cost (AISC) of $720/oz to $770/oz. Copper output is forecast to range between 400-million and 450-million pounds, at an AISC of $2.10/lb to $2.40/lb.
Barrick’s NYSE-listed stock has appreciated by 20.9% since the start of the year, and closed Wednesday at $19.32 apiece.