Barrick Gold Corporation
) adjusted earnings (excluding one-time items) for the fourth
quarter of 2013 plummeted to 37 cents per share from $1.16 in the
year-ago quarter and missed the Zacks Consensus Estimate of 42
cents. Lower realized gold and copper prices and a decline in
gold and copper sales volumes led to the decline in earnings.
On a reported basis, net loss in the fourth quarter was $2.83
billion or $2.61 per share, compared with a net loss of $3.01
billion or $3.01 per share in the prior-year quarter. The loss
includes $2.82 billion in impairment charges, mainly associated
with Pascua-Lama, Porgera and Veladero mines and the Australia
Pacific gold segment; and $176 million in costs associated with
temporary suspension of construction at Pascua-Lama.
For 2013, adjusted earnings (excluding one-time items) dropped to
$2.51 per share from $3.95 in 2012. The results missed the Zacks
Consensus Estimate of $2.55. On a reported basis, Barrick posted
a net loss of $10.37 billion ($10.14 per share), including
after-tax impairment charges of $11.54 billion, compared with a
net loss of $0.54 billion or (54 cents per share) in 2012.
Revenues fell around 29.5% year over year to $2,926 million in
the reported quarter but exceeded the Zacks Consensus Estimate of
$2,815 million. Average realized price of gold decreased 25.8%
year over year to $1,272 per ounce. All-in costs declined 8.1% to
$1,317 per ounce while all-in sustaining costs fell roughly 14.2%
to $899 per ounce in the reported quarter.
Gold production fell to 1.71 million ounces in the quarter
from 2 million ounces a year ago. Copper production increased to
139 million pounds from 130 million pounds in the prior-year
For full-year 2013, revenues declined 13.1% year over year to
$12,511 million, but beat the Zacks Consensus Estimate of $12,393
The Goldstrike mine in the North American region produced 0.24
million ounces of gold in the quarter, down 26.7% year over year,
at average all-in sustaining costs (AISC) of $770 per ounce. The
Cortez mine produced 0.24 million ounces, down 29.5% year over
year. Production at the Pueblo Viejo increased 29.5% to 157
million ounces. Production at Lagunas Norte and Veladero mines
declined 8.9% and 36% year over year, respectively. In North
America-Other mines, production increased 7.5% to 0.23 million
The region produced 0.36 million ounces in the quarter compared
with 0.47 million ounces in the year-ago quarter. AISC was $966
per ounce, down from $1,217 per ounce in the year-ago
African Barrick Gold plc. (ABG):
Attributable production of African Barrick Gold in the quarter
was 0.12 million ounces compared with 0.13 million ounces in the
year-ago quarter. AISC was $1,171 per ounce in the quarter, down
30% year over year.
Cash and cash equivalents stood at $2,404 million as of Dec
31, 2013, up roughly 14.6% from $2,097 million as of Dec 31,
2012. Total debt was $12.9 billion, up around 6.7% from $12.1
billion a year ago.
Suspension of Pascua-Lama Mine
Barrick announced, during the reported quarter, that it has
temporarily suspended construction activities at the Pascua-Lama
mine, barring the requisite activities for environmental
protection and regulatory compliance. Earlier in the year,
Chile's environmental regulator halted construction on its side
of the project, and imposed sanctions citing "serious violations"
of its environmental permit.
The ramp-down is expected to be completed by mid-2014. The
company expects to incur costs of roughly $300 million in 2014
due to the ramp-down as well as for the environmental and social
Barrick stated that it will halt work in such a manner that
will allow efficient and effective re-start when conditions
permit. The decision to re-start will depend on certain factors
like improved project economics, outlook for metal prices, and
reduced uncertainty associated with legal and other regulatory
For 2014, Barrick expects gold production in the range of
6-6.5 million ounces. The lower production in 2014 manifests the
company's strategy to maximize free cash flow and returns over
ounces, the sale of high-cost, short-life mines, lower production
from Cortez, and the move to close Pierina. These declines will
be partly offset by an increase in production at Pueblo Viejo.
Barrick expects AISC to be $920-$980 per ounce and adjusted
operating costs have been projected to be $590-$640 per
Barrick expects total capital expenditures to decrease by
about 50% in 2014 to $2.40-$2.70 billion, a reduction of about
$2.5 billion from 2013.
The company expects exploration budget, which remains focused
on high quality and priority projects, to be in the range of
$200-$240 million. Around 50% of the budget is allocated to
Nevada, most of which is targeted for the Goldrush project.
Barrick forecasts higher finance costs of $800-$825 million in
2014 as a result of the decision to temporarily suspend
Pascua-Lama, where interest will no longer be capitalized.
Effective income tax rate for 2014 is expected to be around 50%
assuming average gold price of $1,300 per ounce.
Currently, Barrick retains a Zacks Rank #3 (Hold).
Some better-ranked stocks in the gold mining industry include
Golden Star Resources Ltd.
Lake Shore Gold Corp.
), each with a Zacks Rank #2 (Buy).
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LAKE SHORE GOLD (LSG): Free Stock Analysis
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