TORONTO (miningweekly.com) – The world’s largest gold producer by output Barrick Gold has booked a third-quarter net loss, impacted by a significant impairment charge on its Zaldívar mine, in Chile, and lower realised metal prices.

For the three months ended September 30, Toronto-based Barrick reported a net loss of $264-million, or $0.23 a share, compared with earnings of $125-million, or $0.11 a share, during the comparable quarter a year earlier.

The company booked $455-million in impairment charges, mainly related to the reclassification of the Zaldívar mine as held-for-sale and $29-million in costs arising from the write-down of obsolete supplies inventory. This was partially offset by $52-million in gains related to the sale of the Cowal mine, in New South Wales, Australia, and half of its interest in the Porgera mine, in Papua New Guinea, and $45-million in unrealised foreign currency translation gains.

Adjusted to remove one-time expenses, Barrick reported net earnings of $131-million, or $0.11 a share, compared with $222-million, or $0.19 a share, a year earlier. Wall Street analysts had expected adjusted net earnings of $0.07 a share on revenue of $2.3-billion.

During the quarter, the company recorded consolidated revenue of $2.32-billion, down 12% year-on-year as the average realised gold price declined 12% to $1 125/oz and the average realised copper price tumbled almost 30% in the last 12 months to $2.18/lb.

Offsetting this were marginally improved gold sales at 1.6-million ounces and a 29% jump in copper sold to 145-million pounds during the quarter.

Gold output in the third quarter was 1.66-million ounces at all-in sustaining costs (AISC) of $771/oz. Copper output stood at 14-million pounds at C1 cash costs of $1.53/lb, down 16% year-on-year.

DEBT PROGRESS
So far this year, Barrick had reduced its total debt load by 15% from $13.1-billion to $11.2-billion, significantly reducing its near-term obligations.

The company had also completed or announced asset sales, joint ventures and partnerships valued at $2.46-billion, putting it on track to reach its debt-reduction target of $3-billion.

Building on the $1.9-billion in repayments already completed this year, Barrick intended to reduce its debt using about $1-billion generated through the sale of half of Zaldívar, which was expected to close in the fourth quarter.

This would bring total debt repayments to about $2.9-billion, with free cash flow expected to make up the balance of its target.

Assuming the completion of $3-billion in repayments, total debt would have been reduced by 23% by the end of the year from $13.1-billion to $10.1-billion.

Barrick also expected to announce the outcome of a process to sell off certain noncore US assets in the fourth quarter.

OUTLOOK
Barrick had lowered the top-end of its full-year gold guidance from between 6.1-million ounces and 6.4-million ounces to between 6.1-million ounces and 6.3-million ounces, reflecting lower expected output from Acacia Mining. Barrick's share of third-quarter output from the Africa-focused miner was lower than expected at 104 000 oz, owing to temporary factors impacting output from the Tanzania-based Bulyanhulu and Buzwagi mines.

The AISC cost guidance for the year was lowered to between $830/oz and $870/oz from the previous range of $840/oz to $880/oz. The average AISC for Barrick’s five core mines was now expected to be $700/oz to $725/oz in 2015, down from $725/oz to $775/oz at the start of this year. These mines were expected to account for about 75% of free cash flow from operations and 60% to 65% of output in 2015.

Barrick expected its fourth quarter AISC costs to be on par with the third quarter, while output was expected to be slightly higher, mainly driven by the impact of higher sustaining capital expenditure being offset by higher production at Cortez, in Nevada, Pueblo Viejo, in the Domican Republic, Lagunas Norte, in Peru, and Veladero, in Argentina. The company also expected significantly higher depreciation in the fourth quarter, mainly related to a drawdown in inventory stockpiles at Cortez, Lagunas Norte and Goldstrike, in Nevada, and higher sales volumes at Pueblo Viejo.

Copper guidance for 2015 remained unchanged at 480-million pounds to 520-million pounds. Full-year C1 cash costs were now expected to be $1.60/lb to $1.85/lb, down from $1.75/lb to $2/lb, driven by currency impacts and improved costs at Lumwana, in Zambia.

At the end of 2014, Barrick had 93-million ounces of proven and probable gold reserves and 94-million ounces of measured and indicated gold resources. At 1.37 g/t, its reserve grade was more than 50% higher than the senior peer average.

Having lost more than 30% in value since the start of the year, Barrick’s NYSE-quoted stock gained 1.43% in after-market trading to $7.80 apiece.