All amounts expressed in U.S. dollars unless
otherwise indicated
Barrick Gold Corporation (NYSE:ABX)(TSX:ABX) (“Barrick” or the
“Company”) today announced preliminary third quarter sales of 1.20
million ounces of gold, and 114 million pounds of copper, as well
as preliminary third quarter production of 1.15 million ounces of
gold, and 106 million pounds of copper. The average market price
for gold in the third quarter was $1,213 per ounce, while the
average market price for copper was $2.77 per pound.
Preliminary third quarter gold sales of 1.20
million ounces, and gold production of 1.15 million ounces, were
approximately 16 percent and 8 percent higher than the second
quarter, respectively, primarily due to improved throughput and
grade at Barrick Nevada. Third quarter gold cost of sales per
ounce1 is expected to be approximately 3-5 percent lower, cash
costs per ounce2 1-3 percent lower, and all-in sustaining costs per
ounce2 approximately 7-9 percent lower, as compared to the second
quarter.
We are maintaining our 2018 consolidated gold
production guidance of 4.5-5.0 million ounces, at a cost of sales
of $810-$850 per ounce1, cash costs2 of $540-$575 per ounce, and
all-in sustaining costs2 of $765-$815 per ounce.3 We expect gold
production to be approximately 1.25 million ounces in the fourth
quarter.
Preliminary third quarter copper sales of 114
million pounds, and copper production of 106 million pounds, were
approximately 54 percent and 28 percent higher than the second
quarter of the year, respectively, primarily as a result of higher
production at Lumwana, driven by a steady improvement in grade and
recovery, and improved crusher reliability. We expect a
quarter-over-quarter decrease in our consolidated copper cost of
sales per pound1 of approximately 10-12 percent, C1 cash costs
per pound2 of approximately 7-9 percent, and all-in sustaining
costs per pound2 of approximately 10-12 percent, as compared to the
second quarter.
We are maintaining our 2018 copper production
guidance of 345-410 million pounds, at a cost of sales of
$2.00-$2.30 per pound1, C1 cash costs2 of $1.80-$2.00 per pound,
and all-in sustaining costs2 of $2.55-$2.85 per pound.3
We now expect our full-year 2018 effective tax
rate to be approximately 48-50 percent, assuming a gold price of
$1,200 per ounce for the remainder of the year. The increase from
our previous guidance range of 44-46 percent is due to
lower-than-anticipated sales from operations in lower-tax
jurisdictions, in particular Barrick Nevada, while costs in
non-tax-effected entities have remained relatively stable. We
expect an effective tax rate in the third quarter of around 59
percent, which is higher than our year-to-date effective tax rate,
as a result of adjusting our first-half 2018 tax expense from 44
percent to 49 percent.
Barrick will provide additional discussion and
analysis regarding third quarter production and sales when the
Company reports quarterly results on October 24, 2018, followed by
a conference call and webcast on October 25 at 8:00 a.m. ET. The
following table includes preliminary gold and copper production and
sales results from our operations:
|
Three months ended September 30,
2018 |
Nine months ended September 30,
2018 |
|
Production |
Sales |
Production |
Sales |
Gold (equity ounces (000s)) |
Barrick Nevada4 |
545 |
596 |
1,480 |
1,502 |
Pueblo Viejo (60%) |
151 |
147 |
415 |
420 |
Lagunas Norte |
64 |
67 |
195 |
201 |
Veladero (50%)5 |
49 |
50 |
201 |
206 |
Turquoise Ridge (75%) |
79 |
75 |
194 |
196 |
Acacia (63.9%) |
87 |
87 |
250 |
247 |
Kalgoorlie (50%) |
75 |
77 |
256 |
259 |
Porgera (47.5%) |
53 |
62 |
134 |
141 |
Hemlo |
41 |
39 |
119 |
120 |
Golden Sunlight |
5 |
4 |
21 |
20 |
Total Gold |
1,149 |
1,204 |
3,265 |
3,312 |
|
|
|
|
|
Copper (equity pounds
(millions)) |
Lumwana |
64 |
65 |
159 |
157 |
Zaldívar (50%) |
28 |
28 |
75 |
73 |
Jabal Sayid (50%) |
14 |
21 |
40 |
43 |
Total Copper |
106 |
114 |
274 |
273 |
INVESTOR CONTACTDeni
NicoskiSenior Vice PresidentInvestor RelationsTelephone:
+1 416 307-7474Email: dnicoski@barrick.com
MEDIA CONTACTAndy
Lloyd Senior Vice PresidentCommunicationsTelephone: +1 416
307-7414Email: alloyd@barrick.com
TECHNICAL INFORMATIONThe
scientific and technical information contained in this press
release has been reviewed and approved by Geoffrey Locke, P. Eng.,
Manager, Metallurgy of Barrick who is a “Qualified Person” as
defined in National Instrument 43-101 – Standards of Disclosure for
Mineral Projects.
THIRD QUARTER 2018
RESULTSBarrick will release its Third Quarter 2018 Results
on October 24, 2018, followed by a conference call and webcast on
October 25 at 8:00 a.m. ET.
Toll Free (U.S. and Canada):
1-800-319-4610International: +1 416 915-3239
The webcast and presentation materials will be
available on Barrick’s website. The conference call will be
available for replay by phone at 1-855-669-9658 (U.S. and Canada
toll free), and +1 604 674-8052 (international), access code
2579.
ENDNOTE 1Cost of sales
applicable to gold per ounce is calculated using cost of sales
applicable to gold on an attributable basis (removing the
non-controlling interest of 40% Pueblo Viejo and 36.1% Acacia from
cost of sales), divided by attributable gold ounces. Cost of sales
applicable to copper per pound is calculated using cost of sales
applicable to copper including our proportionate share of cost of
sales attributable to equity method investments (Zaldívar and Jabal
Sayid), divided by consolidated copper pounds (including our
proportionate share of copper pounds from our equity method
investments). Cost of sales includes depreciation.
ENDNOTE 2Cash costs per ounce
and all-in sustaining costs per ounce are non-GAAP financial
measures which are calculated based on the definition published by
the World Gold Council (“WGC”) (a market development organization
for the gold industry comprised of and funded by 24 gold mining
companies from around the world, including Barrick). The WGC is not
a regulatory organization. Management uses these measures to
monitor the performance of our gold mining operations and its
ability to generate positive cash flow, both on an individual site
basis and an overall company basis.
Cash costs start with our cost of sales related
to gold production and removes depreciation, the non-controlling
interest of cost of sales, and includes by-product credits. All-in
sustaining costs start with cash costs and include sustaining
capital expenditures, general and administrative costs,
minesite exploration and evaluation costs, and reclamation cost
accretion and amortization. These additional costs reflect the
expenditures made to maintain current production levels.
We believe that our use of cash costs and all-in
sustaining costs will assist analysts, investors, and other
stakeholders of Barrick in understanding the costs associated with
producing gold, understanding the economics of gold mining,
assessing our operating performance, and also our ability to
generate free cash flow from current operations, and to generate
free cash flow on an overall company basis. Due to the
capital-intensive nature of the industry and the long useful lives
over which these items are depreciated, there can be a significant
timing difference between net earnings calculated in accordance
with IFRS and the amount of free cash flow that is being generated
by a mine, and therefore we believe these measures are useful
non-GAAP operating metrics and supplement our IFRS disclosures.
These measures are not representative of all of our cash
expenditures as they do not include income tax payments, interest
costs, or dividend payments. These measures do not include
depreciation or amortization.
Cash costs per ounce and all-in sustaining costs
are intended to provide additional information only, and do not
have standardized definitions under IFRS, and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. These measures are
not equivalent to net income or cash flow from operations as
determined under IFRS. Although the WGC has published a
standardized definition, other companies may calculate these
measures differently.
C1 cash costs per pound and all-in sustaining
costs per pound are non-GAAP financial measures related to our
copper mine operations. We believe that C1 cash costs per pound
enables investors to better understand the performance of our
copper operations in comparison to other copper producers who
present results on a similar basis. C1 cash costs per pound
excludes royalties and non-routine charges as they are not direct
production costs. All-in sustaining costs per pound is similar to
the gold all-in sustaining costs metric and management uses this to
better evaluate the costs of copper production. We believe this
measure enables investors to better understand the operating
performance of our copper mines as this measure reflects all of the
sustaining expenditures incurred in order to produce copper. All-in
sustaining costs per pound includes C1 cash costs, corporate
general and administrative costs, minesite exploration and
evaluation costs, royalties, environmental rehabilitation costs,
and write-downs taken on inventory to net realizable value.
Barrick will provide a full reconciliation of
our final non-GAAP financial measures when the Company reports its
quarterly results on October 24, 2018.
ENDNOTE 32018 guidance is based
on gold, copper, WTI oil price, and Brent oil price assumptions of
$1,200/oz, $2.75/lb, $65/bbl, and $75/bbl respectively, a USD:AUD
exchange rate of 0.75:1, a CAD:USD exchange rate of 1.25:1, a
ARS:USD exchange rate of 30:1, and a CLP:USD exchange rate of
625:1.
ENDNOTE 4Includes our 60%
equity share of South Arturo.
ENDNOTE 5Reflects our 50%
equity share of Veladero.
CAUTIONARY STATEMENTS REGARDING
PRELIMINARY THIRD QUARTER PRODUCTION, SALES, AND COSTS FOR 2018,
AND FORWARD-LOOKING INFORMATIONBarrick cautions that,
whether or not expressly stated, all third quarter figures
contained in this press release including, without limitation,
production levels and sales and associated costs (including costs
of sales per ounce for gold and per pound for copper, all-in
sustaining costs per ounce/pound, cash costs per ounce, and C1 cash
costs per pound) are preliminary, and reflect our expected third
quarter results as of the date of this press release. Actual
reported third quarter production levels and sales and associated
costs are subject to management’s final review, as well as review
by the Company’s independent accounting firm, and may vary
significantly from those expectations because of a number of
factors, including, without limitation, additional or revised
information, and changes in accounting standards or policies, or in
how those standards are applied. Barrick will provide additional
discussion and analysis and other important information about its
third quarter production levels and sales and associated costs when
it reports actual results on October 24, 2018. For a complete
picture of the Company’s financial performance, it will be
necessary to review all of the information in the Company’s third
quarter financial report and related MD&A. Accordingly, readers
are cautioned not to rely solely on the information contained
herein.
Finally, Barrick cautions that this press
release contains forward-looking statements with respect to: (i)
Barrick’s forward-looking production guidance; (ii) estimates of
future cost of sales per ounce for gold and per pound for copper,
all-in sustaining costs per ounce/pound, cash costs per ounce, and
C1 cash costs per pound; and (iii) estimates of future effective
tax rates.
Forward-looking statements are necessarily based
upon a number of estimates and assumptions including material
estimates and assumptions related to the factors set forth below
that, while considered reasonable by the Company as at the date of
this press release in light of management’s experience and
perception of current conditions and expected developments, are
inherently subject to significant business, economic, and
competitive uncertainties and contingencies. Known and unknown
factors could cause actual results to differ materially from those
projected in the forward-looking statements, and undue reliance
should not be placed on such statements and information. Such
factors include, but are not limited to: fluctuations in the spot
and forward price of gold, copper, or certain other commodities
(such as silver, diesel fuel, natural gas, and electricity); the
speculative nature of mineral exploration and development; changes
in mineral production performance, exploitation, and exploration
successes; risks associated with the fact that certain
Best-in-Class initiatives are still in the early stages of
evaluation, and additional engineering and other analysis is
required to fully assess their impact; risks associated with the
ongoing implementation of Barrick’s digital transformation
initiative, and the ability of the projects under this initiative
to meet the Company’s capital allocation objectives; the duration
of the Tanzanian ban on mineral concentrate exports; the ultimate
terms of any definitive agreement between Acacia and the Government
of Tanzania to resolve a dispute relating to the imposition of the
concentrate export ban and allegations by the Government of
Tanzania that Acacia under-declared the metal content of
concentrate exports from Tanzania and related matters; whether
Acacia will approve the terms of any final agreement reached
between Barrick and the Government of Tanzania with respect to the
dispute between Acacia and the Government of Tanzania; the benefits
expected from recent transactions being realized; diminishing
quantities or grades of reserves; increased costs, delays,
suspensions and technical challenges associated with the
construction of capital projects; operating or technical
difficulties in connection with mining or development activities,
including geotechnical challenges and disruptions in the
maintenance or provision of required infrastructure and information
technology systems; failure to comply with environmental and health
and safety laws and regulations; timing of receipt of, or failure
to comply with, necessary permits and approvals; uncertainty
whether some or all of the Best-in-Class initiatives, targeted
investments and projects will meet the Company’s capital allocation
objectives and internal hurdle rate; the impact of global liquidity
and credit availability on the timing of cash flows and the values
of assets and liabilities based on projected future cash flows; the
impact of inflation; fluctuations in the currency markets; changes
in national and local government legislation, taxation, controls or
regulations and/ or changes in the administration of laws, policies
and practices, expropriation or nationalization of property and
political or economic developments in Canada, the United States,
and other jurisdictions in which the Company or its affiliates do
or may carry on business in the future; lack of certainty with
respect to foreign legal systems, corruption and other factors that
are inconsistent with the rule of law; damage to the Company’s
reputation due to the actual or perceived occurrence of any number
of events, including negative publicity with respect to the
Company’s handling of environmental matters or dealings with
community groups, whether true or not; the possibility that future
exploration results will not be consistent with the Company’s
expectations; risks that exploration data may be incomplete and
considerable additional work may be required to complete further
evaluation, including but not limited to drilling, engineering and
socioeconomic studies and investment; risk of loss due to acts of
war, terrorism, sabotage and civil disturbances; litigation and
legal and administrative proceedings; contests over title to
properties, particularly title to undeveloped properties, or over
access to water, power and other required infrastructure; business
opportunities that may be presented to, or pursued by, the Company;
our ability to successfully integrate acquisitions or complete
divestitures; risks associated with working with partners in
jointly controlled assets; employee relations including loss of key
employees; increased costs and physical risks, including extreme
weather events and resource shortages, related to climate change;
and availability and increased costs associated with mining inputs
and labor. In addition, there are risks and hazards associated with
the business of mineral exploration, development and mining,
including environmental hazards, industrial accidents, unusual or
unexpected formations, pressures, cave-ins, flooding and gold
bullion, copper cathode or gold or copper concentrate losses (and
the risk of inadequate insurance, or inability to obtain insurance,
to cover these risks).
Many of these uncertainties and contingencies
can affect our actual results and could cause actual results to
differ materially from those expressed or implied in any
forward-looking statements made by, or on behalf of, us. Readers
are cautioned that forward-looking statements are not guarantees of
future performance. All of the forward-looking statements made in
this press release are qualified by these cautionary statements.
Specific reference is made to the most recent Form 40-F/Annual
Information Form on file with the SEC and Canadian provincial
securities regulatory authorities for a more detailed discussion of
some of the factors underlying forward-looking statements and the
risks that may affect Barrick’s ability to achieve the expectations
set forth in the forward-looking statements contained in this press
release.
Barrick disclaims any intention or obligation to
update or revise any forward-looking statements whether as a result
of new information, future events or otherwise, except as required
by applicable law.
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