VANCOUVER (miningweekly.com) – Canadian mining major Barrick Gold's Porgera Joint Venture mine, in Papua New Guinea, is still operating at only 25% of capacity following a 7.5 magnitude earthquake that struck the island on February 26, the company announced on Monday in its first-quarter earnings release.

The earthquake damaged a power plant that supplies electricity to the Porgera mine. The mine's processing plant is currently operating at reduced capacity, supported by an existing on-site diesel power station, as well as portable generators.

Barrick said the operation is expected to increase processing capacity in stages, with full capacity to be reached by the fourth quarter.

While the impact of this event on production at Porgera remains under evaluation, Barrick left its consolidated 2018 gold guidance unaltered. The multinational miner expects that business interruption insurance will mitigate a significant portion of earnings lost as a result of the event, the company said.

Meanwhile, Barrick reported on Monday that it had halved its debt load in the past three years, from $13.1-billion at the end of 2014, to $6.4-billion by the end of 2017. In the first quarter, both S&P Global Ratings and Moody's Investors Service upgraded Barrick's credit rating, citing significant improvements in free cash flow generation and liquidity, supported by the company's low-cost portfolio and favourable geopolitical risk profile.

Barrick said it does not intend to sell any further assets for purposes of debt reduction, and will use cash on hand and cash flow from operations for future debt repayments. Barrick advised that its goal remains to reduce total debt from $6.4-billion at present, to about $5-billion by the end of 2018.

At the end of March, Barrick had a consolidated cash balance of about $2.4-billion. The company reported less than $100-million in debt due before 2020, and more than three-quarters of its outstanding total debt of $6.4-billion does not mature until after 2032.

Q1 RESULTS
Barrick has reported a better-than-expected profit for the first quarter ended March 31, as higher metal prices boosted the bottom line. The Toronto-based miner reported headline earnings of $170-million, or $0.15 a share, slightly higher year-on-year and beating average Wall Street analyst forecasts calling for profit of $0.14 a share.

Net earnings attributable to shareholders came to $158-million, or $0.14 a share, compared with net earnings of $679-million, or $0.58 a share, in the comparable year-earlier period.

The company reported a 10% decline in first-quarter revenues to $1.79-billion, as gold and copper sales plunged 18% and 8.6%, to 1.07-billion ounces of gold and 85-million pounds of copper, respectively.

The average realised gold price was up 9.2% in the first quarter at $1 332/oz, with the average realised copper price jumping 19.3% to $3.16/lb in the first quarter.

Gold all-in sustaining costs (AISC) rose 4.14% in the period to $804/oz, while the same metric for copper rose a hefty 19% to $2.61/lb, Barrick reported.

Gold output for the first quarter amounted to 1.05-million ounces – down about 20% year-on-year.

Barrick advised that second-quarter production is expected to be on par with the prior period, mainly owing to the impact of a scheduled maintenance shutdown at the Barrick Nevada roaster.

Sustaining capital expenditure is expected to be higher in the second quarter as the North American construction season ramps up for significant sustaining projects such as tailings dam raises. Capitalised stripping at Barrick Nevada, Pueblo Viejo and Veladero, and increased underground development at Barrick Nevada, are also expected to be higher in the second quarter.

Barrick expects the development work, stripping and maintenance in the second quarter, along with access to higher grades in the second half of the year, to drive stronger output in the third and fourth quarters, at lower costs. Higher grades and throughput at Barrick Nevada and Pueblo Viejo in the second half of the year are expected to drive higher output.

Barrick confirmed its full-year production guidance of 4.5-million to 5-million ounces, at an AISC of $765/oz to $815/oz. Full-year copper production output is expected to reach between 385-million and 450-million pounds, at an AISC of $2.30/lb to $2.60/lb. Lower realised grades in the first quarter at the Lumwana mine, in Zambia, are expected to steadily improve over the course of 2018.

Nevada remains the focus of Barrick's 2018 exploration programmes and project development activities. Barrick Nevada currently has about 4.8-million ounces of proven gold reserves in existing stockpiles. To unlock the full potential of its Nevada asset base, the company is studying an increase in processing capacity that would accommodate new production from organic projects, and bring forward production from stockpiles, increasing overall production levels from Nevada. The Fourmile exploration programme in the Cortez district is progressing well, with encouraging initial assay results, the company said.

Barrick's TSX-listed stock has trended negatively since the start of the year, losing 8.8%, reflecting to some extent the range-bound sideways crawl of the gold price over the same period. The stock closed down 1.07% on Monday at C$16.58 apiece, as gold also fell 0.57% to $1 324.90/oz.