Q1 Lays Solid Foundation for Barrick's Full-Year Production Targets
All amounts expressed in US dollars
TORONTO, April 16, 2020 (GLOBE NEWSWIRE) -- Barrick Gold Corporation (NYSE:GOLD)(TSX:ABX) (“Barrick” or the “company”) today reported preliminary first quarter sales of 1.22 million ounces of gold and 110 million pounds of copper as well as preliminary first quarter production of 1.25 million ounces of gold and 115 million pounds of copper.
President and Chief Executive Mark Bristow said these results positioned Barrick well to achieve its guidance for the year despite the impact of the global Covid-19 pandemic and the resultant lockdowns1.
Bristow also said comprehensive programs to counter the spread of Covid-19 were in action at all of Barrick’s operations and it had taken the necessary steps to manage the impact of the pandemic on its business. As announced earlier, the company has provided financial aid and support to its host countries to strengthen their campaigns against the virus.
The average market price for gold in the first quarter was $1,583 per ounce, while the average market price for copper in the first quarter was $2.56 per pound. The company’s first quarter realized copper price2 is expected to be 12-14% below the average first quarter market price for copper, primarily as a result of provisional pricing adjustments3 that reflect the downward trend in copper prices over the period.
First quarter gold costs, including cost of sales per ounce4, total cash costs per ounce5 and gold all-in sustaining costs per ounce5, are expected to be similar to the fourth quarter of 2019. Preliminary first quarter copper production was in line with the fourth quarter of 2019, while preliminary first quarter copper sales improved from the previous quarter following the completion of a major refurbishment at a third-party smelter that processes a portion of Lumwana’s concentrate. First quarter copper cost of sales per pound4 are expected to be 12-14% lower than the prior quarter. C1 cash costs per pound5 and copper all-in sustaining costs per pound5 are expected to be 17-19% and 27-29% lower, respectively, than the fourth quarter of 2019, primarily due to the increase in copper sales.
Barrick will provide additional discussion and analysis regarding its first quarter production and sales when the company reports its quarterly results before North American markets open on May 6, 2020. Given our Covid-19 protocols, Mark Bristow will host an interactive webinar on the results at 11:00 EDT/15:00 UTC. The presentation will be linked to the webinar and conference call. Participants will be able to ask questions.
The following table includes preliminary gold and copper production and sales results from Barrick's operations:
| Three months ended | ||
| March 31, 2020 | ||
| Production | Sales | |
| Gold (equity ounces (000s)) | ||
| Carlin6 (61.5%) | 253 | 256 |
| Cortez (61.5%) | 128 | 128 |
| Turquoise Ridge (61.5%) | 84 | 87 |
| Phoenix (61.5%) | 35 | 30 |
| Long Canyon (61.5%) | 26 | 27 |
| Nevada Gold Mines (61.5%) | 526 | 528 |
| Pueblo Viejo (60%) | 143 | 144 |
| Loulo-Gounkoto (80%) | 141 | 123 |
| Kibali (45%) | 91 | 88 |
| Veladero (50%) | 75 | 57 |
| North Mara (84%) | 65 | 70 |
| Porgera (47.5%) | 62 | 63 |
| Tongon (89.7%) | 61 | 58 |
| Hemlo | 57 | 58 |
| Buzwagi (84%) | 22 | 24 |
| Bulyanhulu (84%) | 7 | 7 |
| Total Gold | 1,250 | 1,220 |
| Copper (equity pounds (millions)) | ||
| Lumwana | 64 | 63 |
| Zaldívar (50%) | 31 | 30 |
| Jabal Sayid (50%) | 20 | 17 |
| Total Copper | 115 | 110 |
First Quarter 2020 Results Announcement and Webinar
Barrick will release its First Quarter 2020 results before market open on May 6, 2020. Given our Covid-19 protocols, President and CEO Mark Bristow will host an interactive webinar on the results at 11:00 EDT/15:00 UTC. The presentation will be linked to the webinar and conference call. Participants will be able to ask questions.
Webinar
US and Canada (toll-free) 1 800 319 4610
UK (toll-free) 0808 101 2791
International (toll) +1 416 915 3239
The Q1 2020 presentation materials will be available on Barrick’s website at www.barrick.com.
The webinar will remain on the website for later viewing, and the conference call will be available for replay by telephone at 1 855 669 9658 (US and Canada) and +1 604 674 8052 (international), access code 4363.
Enquiries
Analyst, Investor Relations and Corporate Access
Claudia Pitre
+1 416 307 5105
cpitre@barrick.com
Group Investor and Media Relations
Kathy du Plessis
+44 20 7557 7738
barrick@dpapr.com
Technical Information
The scientific and technical information contained in this news release has been reviewed and approved by: Steven Yopps, MMSA, Manager of Growth Projects, Nevada Gold Mines; Chad Yuhasz, P.Geo, Barrick’s Mineral Resource Manager, Latin America and Australia Pacific; and Simon Bottoms, CGeol, Barrick's Mineral Resources Manager, Africa and Middle East — each a “Qualified Person” as defined in National Instrument 43-101 - Standards of Disclosure for Mineral Projects.
Endnote 1
Barrick is closely monitoring the global Covid-19 pandemic and Barrick’s guidance may be impacted if the operation or development of our mines and projects is disrupted due to efforts to slow the spread of the virus.
Endnote 2
Copper realized price is a non-GAAP financial measure which excludes from sales: (i) unrealized gains and losses on non-hedge derivative contracts; (ii) unrealized mark-to-market gains and losses on provisional pricing from copper sales contracts; (iii) sales attributable to ore purchase arrangements; and (iv) treatment and refining charges.
This measure is intended to enable management to better understand the price realized in each reporting period for copper sales because unrealized mark-to-market values of non-hedge copper derivatives are subject to change each period due to changes in market factors such as market and forward copper prices, so that prices ultimately realized may differ from those recorded. The exclusion of such unrealized mark-to-market gains and losses from the presentation of this performance measure enables investors to understand performance based on the realized proceeds of selling copper production.
The gains and losses on non-hedge derivatives and receivable balances relate to instruments/balances that mature in future periods, at which time the gains and losses will become realized. The amounts of these gains and losses reflect fair values based on market valuation assumptions at the end of each period and do not necessarily represent the amounts that will become realized on maturity. For those reasons, management believes that this measure provides a more accurate reflection of our company’s past performance and is a better indicator of its expected performance in future periods.
The realized price measure is intended to provide additional information, and does not have any standardized definition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The measure is not necessarily indicative of sales as determined under IFRS. Other companies may calculate this measure differently.
Endnote 3
The sales price for Barrick’s copper production is determined provisionally at the date of sale with the final price determined based on market copper prices at a future date set by the customer, generally one to three months after the initial date of sale. Market prices for copper may fluctuate during this extended settlement period. The prices of Barrick’s copper sales are marked-to-market at the balance sheet date based on the forward copper price for the relevant quotational period. All such mark-to-market adjustments are recorded in copper sale revenues. If the market price for copper declines, the final sale price realized by the company at settlement may be lower than the provisional sale price initially recognized by the company, requiring negative adjustments to Barrick’s average realized copper price for the relevant period.
Endnote 4
Cost 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, 38.5% Nevada Gold Mines, 63.1% South Arturo, 20% Loulo-Gounkoto, 16% North Mara, Bulyanhulu and Buzwagi and 10.3% of Tongon and including our proportionate share of cost of sales attributable to equity method investments (Kibali) in 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).
Endnote 5
Total cash costs per ounce, all-in sustaining costs per ounce and all-in costs per ounce are non-GAAP financial measures which are calculated based on the definition published by the World Gold Council (a market development organization for the gold industry comprised of and funded by 25 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.
Total 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 total cash costs and include sustaining capital expenditures, sustaining leases, general and administrative costs, mine site 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 total cash costs, all-in sustaining costs and all-in 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 our cash expenditures as they do not include income tax payments, interest costs or dividend payments. These measures do not include depreciation or amortization.
Total cash costs per ounce, all-in sustaining costs and all-in 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 production taxes 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 the sustaining expenditures incurred in order to produce copper. All-in sustaining costs per pound includes C1 cash costs, sustaining capital expenditures, sustaining leases, general and administrative costs, minesite exploration and evaluation costs, royalties and production taxes, reclamation cost accretion and amortization and write-downs taken on inventory to net realizable value.
Barrick will provide a full reconciliation of these non-GAAP financial measures when the company reports its quarterly results on May 6, 2020.
Endnote 6
Includes Nevada Gold Mines’ 60% equity share of South Arturo.
Cautionary Statements Regarding Preliminary First Quarter Production, Sales and Costs for 2020, and Forward-Looking Information
Barrick cautions that, whether or not expressly stated, all first quarter figures contained in this press release including, without limitation, production levels, sales and associated costs are preliminary, and reflect our expected first quarter results as of the date of this press release. Actual reported first quarter production levels, 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 first quarter production levels and sales and associated costs when it reports actual results on May 6, 2020. For a complete picture of the company’s financial performance, it will be necessary to review all of the information in the company’s first 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 production; (ii) costs per ounce for gold and per pound for copper; (iii) expectations regarding future production and financial performance and other outlook or guidance; and (iv) preventative measures implemented by Barrick to manage the impact of the Covid-19 pandemic and Barrick’s engagement with local communities.
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 projects in the early stages of evaluation, and for which additional engineering and other analysis is required; disruption of supply routes which may cause delays in construction and mining activities at Barrick’s more remote properties; whether benefits expected from recent transactions are 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 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 U.S. dollar interest rates; risks arising from holding derivative instruments; 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; risks associated with illegal and artisanal mining; risks associated with new diseases, epidemics and pandemics, including the effects and potential effects of the global Covid-19 pandemic; 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, including our ability to successfully reintegrate Acacia’s operations; 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. Barrick also cautions that its 2020 guidance may be impacted by the unprecedented business and social disruption caused by the spread of Covid-19. 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.
