JOHANNESBURG (miningweekly.com) – Dual-listed Barrick Gold on Wednesday said it was on track to deliver production at the higher end, and costs at the lower end, of its guidance ranges for the year.
This is on the back of the miner’s third-quarter results, ended September 30, which show net earnings of $1.30 a share, and adjusted net earnings a share of $0.15, marking a 67% increase quarter-on-quarter on the back of a higher gold price, and debt, net of cash, being 14% lower quarter-on-quarter at $3.2-billion.
The quarterly dividend increased by 25%, to $0.05 a share, on the back of the robust operational performance and the growth in cash flow.
Barrick senior executive VP and CFO Graham Shuttleworth on Wednesday said Barrick had continued to perform well and that the increased dividend reflected its strong operating performance and growth in cash flow.
These, he added, were consistent with the company’s stated financial and operating objectives.
Meanwhile, the Nevada Gold Mines joint venture delivered a solid performance against plan in what was its inaugural quarter of operation. The Pueblo Viejo mine, in the Dominican Republic, achieved an improved performance at a lower cost.
A prefeasibility study into a proposed plant expansion at the mine is expected to be completed by the end of the year.
Loulo-Gounkoto, in Mali, and Porgera, in Papua New Guinea, also posted robust results, with continued efficiency improvements lifting the group’s copper production by 15% quarter-on-quarter.
For the three-month period ended September 30, Barrick produced 1.3-million ounces of gold, at an all-in sustaining cost (AISC) of $984/oz, and 112-million pounds of copper at an AISC of $2.58/lb.
Barrick president and CE Mark Bristow said the company’s “lean, agile management teams had built on a return to the basics of mineral resource management to deliver performance improvements across the group, as well as a range of new opportunities”.
These included a major new discovery at Fourmile, in Nevada, in the US; life-of-mine (LoM) extensions at Porgera and Veladero; and the confirmation of a wide-ranging geological upside.
Barrick has prepared detailed five-year plans for each region which will be shared during the fourth quarter. The plans will be followed by a ten-year production plan, scheduled for publication alongside Barrick’s annual report.
Bristow explained that the objective was to make capital allocation, budgeting and forecasting more dynamic, which would, combined with the roll-out of its new information management systems, enable Barrick to use real-time data availability for real-time decision-making.
Barrick has also moved the ownership of orebody modelling, reserve and resource estimation and mine planning to the operations, with oversight from the corporate executive, in line with its policy of effective on-site management and a flat organisational structure.
The planned disposal of noncore assets was progressing as scheduled and was expected to realise $1.5-billion or more by the end of next year, Bristow said on Wednesday, enthusing that “these are exciting times” with opportunities to deliver value.
Additionally, effective exploration and responsible orebody stewardship were central to the success of the group’s legacy companies – the pre-merger Barrick and Randgold – but Barrick’s geocentric focus had faded over the years.
According to Bristow, the merger presented the opportunity to “reinvigorate and strengthen” exploration and mineral resource management, and reposition them as the starting point for optimal planning and the first link in the value chain.
Since the start of the year, which also saw the re-introduction of focused exploration programmes for Barrick’s next tier one asset, significant new mineral potential has been identified across Barrick’s portfolio of operations.
Exploration has since delivered a new discovery close to Fourmile and Goldrush in Nevada, and the latest drilling and modelling results point to potential LoM extensions at Veladero, Pueblo Viejo, Porgera, Hemlo, Loulo-Gounkoto and Kibali.
At Carlin, district-scale geological compilation and integration have yielded multiple high-quality targets, and drilling is already under way.
Executive VP for exploration and growth Rob Krcmarov on Wednesday noted that in addition to maximising its existing assets, Barrick was already looking beyond the ten-year horizon in its search for new opportunities, based on the group’s broad geological knowledge across multiple world-class destinations.
“Mining is a long-term game, and we’re hunting tier one assets that will deliver value at the top, as well as the bottom of the inevitable cycles and will buffer Barrick against any market volatility,” he said, clarifying that this meant that Barrick “wants orebodies with quality as well as size”.
In efforts to not only deliver a reliable supply of affordable power to its mines, but also to minimise the group’s carbon footprint, Barrick metallurgy, engineering and capital projects executive John Steele said the miner had moved thermal power generation at the mines that require it from diesel and heavy fuel oil (HFO) to natural gas, where possible.
“We’re also extending regional power grids to enable our mines to link up with national systems, and introducing solar power where this can make a difference to our grid supply,” he commented.
The development of the tier one Kibali mine, in the Democratic Republic of Congo (DRC), included the construction of three run of the river hydropower stations.
Another example is Tongon, in Côte d’Ivoire, which is supplied with a mix of gas-generated thermal power and hydropower through the country’s national grid.
Further, in terms of converting world-class orebodies into high-margin businesses, Barrick on Wednesday said it was “always looking for ways to improve [the company’s] efficiencies” and to take its processing operations “to the next level”.
According to Bristow the challenge was “not only to stay at the forefront of technological developments”, but also to ensure that processing facilities were fully integrated with environmental and sustainability initiatives.
Current projects include a new flotation system to support the proposed expansion of Pueblo Viejo’s operations; a modification of the Mill 6 roaster at Carlin to raise throughput and improve productivity; and pushing the grind/recovery/throughput trade-off at Twin Creeks in Nevada to deliver a lower cost per ounce of production.
Meanwhile, following the merger, Barrick set out to build partnerships with all stakeholders and act on their concerns. This came as a result of the new executive team deciding that Barrick’s mines should “create long-term value for all its stakeholders”, including investors, host countries and communities, and employees.
According to Bristow, environmental and social considerations should be embedded in all business decisions to ensure high and rising expectations were met.
Over the past nine months, Barrick has been implementing these principles, with efforts now translating into dividend payments.
Over the last few months, Barrick has also been “doubling down” on its investment in its human capital, with a particular focus on the youth who will provide its future leaders, said Bristow on Wednesday.
“Many of our current executives are the product of our university and vocational training bursaries and have been with the legacy companies since completing their studies,” he elaborated, noting that Barrick’s West and East African management teams were virtually all “home-grown”, as were many of those in North and Latin America.
Barrick intends to continue its search for emerging talent at major tertiary institutions, and will now be extending this to secondary school level to ensure that “the best of the best” are identified and recruited.
“We’re building Barrick into a model of what a modern mining business should be, and our flexible, agile management style requires the constant injection of fresh blood,” Bristow said.
During the third quarter, the government of Tanzania (GoT) and Barrick reached an agreement to settle all disputes between the GoT and the mining companies formerly operated by Acacia, a company in which Barrick previously held a majority stake but now owns after a buyout of the assets.
Final agreements have been submitted to the Tanzanian Attorney General for review and legalisation.
The terms of the agreement include the payment of $300-million to settle all outstanding tax and other disputes, as well as the lifting of the concentrate export ban and the sharing of future economic benefits from the mines on a 50/50 basis. The agreement also includes the establishment of an Africa-focused international dispute resolution framework.
In conjunction with the finalisation of the agreement, a new operating company called Twiga Minerals Corporation has been formed to manage the Bulyanhulu, North Mara and Buzwagi mines.
The GoT will acquire a free-carried shareholding of 16% in each of the mines and will receive half of the economic benefits from taxes, royalties, clearing fees and participation in all cash distributions made by the mines and Twiga.
A yearly true-up mechanism will ensure the maintenance of the 50/50 split, Barrick noted on Wednesday.
Speaking recently after a meeting with the chairperson of the GoT’s negotiating committee, Professor Palamagamba Kabudi, Bristow said the agreements introduced a new era of productive partnership with the GoT and would ensure that Tanzania and its people would share fully in the value created by the mines they hosted.
It also marked the end of the long impasse between the GoT and Acacia which had led, among other things, to the closure of North Mara and the freezing of export concentrate from the two other operations.
Barrick took over the management of the mines after its buy-out of the Acacia minorities last month. Since then it has negotiated the re-opening of North Mara and is engaging with the mines’ host communities to restore their social licence.
“Rebuilding these operations after three years of value destruction will require a lot of work, but the progress we’ve already made will be greatly accelerated by this agreement,” Bristow said.
He added that Twiga would give the government full visibility of and participation in operating decisions made for and by the mines, representing the new partnership not only in spirit but “also in practice”.
Tanzanian nationals are already being employed and trained to replace expatriate staff.
Additionally, the successful two-decade partnership between the government of Mali and Randgold (now Barrick) has made the gold mining industry one of the key drivers of the country’s economy, Bristow said on Wednesday.
Barrick had entered Mali through Randgold’s discovery and development of Morila, which laid the foundation for its mining industry, as well as marking the first true partnership between a host country and investors in West Africa, according to the company.
Since then, Barrick’s operations have paid about $2.7-billion in taxes, royalties and dividends to the State.
Barrick’s mines currently contribute more than 40% of the country’s total gold production.
Bristow said progress had been made in the search for a global and amicable settlement of the tax and fiscal issues between Barrick and the government of Mali and negotiations on the settlement’s implementation were nearing conclusion.
Further, the underground operation at Barrick’s Kibali gold mine set new mining and shaft production records in the third quarter to keep the tier one gold mine on track to meet, or beat, its guidance of 750 000 oz for the year.
Throughput and recovery for the third quarter were said to be at, or above, nameplate level.
According to Bristow, Kibali is busy with the commissioning of a Newtrax system which will provide real-time data collection, enhance predictive maintenance, track and manage the fleet, and implement a digital safety system with personnel tracking.
The mine is also said to be working towards a proof of concept of a highly advanced system that will allow manned and unmanned operations in the same area.
“In line with our policy of local employment and advancement, we continue to transfer the specialised skills required for automated mining to our Congolese workforce,” he commented, adding that the success of this policy “is evident in Kibali’s consistently excellent performance and shows what can be achieved with a world-class asset in a remote and under-developed region of Africa”.
“Following the transition of political power in the DRC . . . we plan to engage the new administration in a review of the 2018 mining code,” he said, adding that he believes that it is still possible to arrive at a dispensation that is more equitable to the industry.