Barrick Gold Corporation
) adjusted earnings (excluding one-time items) fell to 66 cents
per share in the second quarter of 2013 from 82 cents per share
in the year-ago quarter but were ahead of the Zacks Consensus
Estimate of 56 cents.
On a reported basis, net loss came in at $8.56 billion or $8.55
per share, compared with earnings of $787 million or 79 cents per
share. The loss includes a hefty after tax impairment charge of
$8.7 billion incurred due to falling gold prices. Lower
metal prices weighed on the bottom line.
Revenues fell 1.3% year over year to $3,201 million in the
reported quarter but exceeded the Zacks Consensus Estimate of
$3,193 million. Average realized
decreased 12.3% year over year to $1,411 per ounce. All-in costs
declined 17.6% to $1,276 per ounce while all-in sustaining costs
fell 13.4% to $919 per ounce in the reported quarter.
Gold production jumped to 1.81 million ounces in the quarter
from 1.74 million ounces a year ago led by strong performances at
Cortez, Veladero and Lagunas Norte. Copper production increased
to 134 million pounds from 109 million pounds in the prior-year
The Barrick North American unit produced 0.93 million ounces of
gold in the quarter compared with 0.85 million ounces in the
prior-year quarter. Average all-in sustaining costs (AISC) stood
at $797 per ounce compared with $894 per ounce in the year-ago
quarter. Production increased at the Pueblo Viejo mine as the
mine ramped to full capacity in the quarter. Production also
increased at the Cortez mine.
Production from South America in the quarter was 0.30 million
ounces compared with 0.33 million ounces in the year-ago quarter.
AISC of $821 per ounce was better than the company's
The region produced 0.47 million ounces in the quarter, compared
with 0.45 million ounces in the year-ago quarter. AISC was $1,033
per ounce in the quarter.
African Barrick Gold plc. (ABG):
Attributable production from African Barrick Gold in the quarter
came in at 0.12 million ounces, compared with 0.11 million ounces
in the year-ago quarter. AISC was $1,416 per ounce in the
Cash and cash equivalents stood at $2,422 million as of Jun
30, 2013, compared with $2,330 million as of Jun 30, 2012.
Operating cash flow in the reported quarter was $896 million
compared with $919 million in the second quarter of 2012.
Barrick termed out $3 billion of debt at attractive interest
rates to reduce near-term maturities. The company has only about
$1.8 billion of cumulative debt maturing through end-2015.
Barrick said that the Pascua-Lama mine, which is the highest
gold mine in the world, will produce an average of
800,000-850,000 ounces of gold and 35 million ounces of silver in
its first full five years of operation.
Barrick announced that Copiapo Court of Appeals issued a
ruling that the company must build water management system at the
Pascua-Lama project before restarting construction activities in
Chile. The ruling states that the water management system must
comply with the project's environmental permit to the
satisfaction of Chile's Superintendence of the Environment (SMA).
The ruling relates to a constitutional rights protection action
filed in September 2012 on behalf of four indigenous
In May 2013, on the basis of a resolution adopted by SMA, a
fine of about $16 million was imposed on Barrick for not meeting
the environmental control measures at its Pascua-Lama project.
Barrick did not abide by the environmental standards, which
eventually led the Chilean government to halt the construction on
the Chilean side of the project.
As a result of this, capital expenditures at Pascua-Lama over
this period are expected to be reduced by a total of $1.5-$1.8
billion. For the full year, capital expenditures are expected to
be reduced by roughly $0.7-$0.8 billion, including $300 million
in earlier announced deferrals, to around $1.8-$2 billion.
Barrick reduced the quarterly dividend by 75% to 5 cents per
share in order to improve liquidity. The dividend is payable on
Sep 16, 2013, to shareholders of record at the close of business
on Aug 30, 2013.
Subsequent to the reported quarter, Barrick sold Barrick
Energy for total consideration of $442 million, including cash of
$394 million plus a royalty on certain assets valued at $48
million. The proceeds from the divestiture will be recorded in
the third quarter of 2013.
Barrick is also in process to divest certain Australian
entities while it continues to actively pursue other portfolio
optimization opportunities, including the divestiture of other
Barrick maintained its forecast for gold production at 7-7.4
million ounces for 2013. The company reduced its full year all-in
sustaining cost guidance to $900-$975 per ounce from the previous
guidance of $1,000-$1,100 per ounce.
Barrick raised the low end of its estimate for copper to
500-540 million pounds from 480-540 million pounds previously. C1
cash costs are expected to be in the range of $1.95-$2.15 per
pound down from the previous expectation of $2.10-$2.30 per
Barrick reduced 2013 budgeted capital and costs by about $2
billion which has offset the cash flow impact of the drop in gold
and copper prices that occurred this year. The company also
reduced its corporate office staff by roughly 30% and made other
significant job reductions at regional locations to optimize
For 2013, production for the North American region is expected
in the range of 3.55-3.70 million ounces at AISC of $750-$800 per
ounce, lower than the company's previous expectation of $820-$870
Production guidance from South America is reaffirmed in the range
of 1.25-1.35 million ounces in 2013. AISC is expected to be in
the range of $875-$925 per ounce.
Australia Pacific is expected to produce 1.70-1.85 million
ounces in 2013. Barrick reduced its AISC expectation to
$1,100-$1,200 per ounce from previous range of $1,200-$1,300 per
Barrick's share of production at African Barrick Gold is
expected to be in the range of 0.40-0.45 million ounces at AISC
of $1,550-$1,600 per ounce in 2013.
Another mining company
Freeport-McMoRan Copper & Gold Inc.
) recently released its second quarter results. The company
reported earnings of 49 cents per share for second-quarter 2013,
a decline of 33.8% from the year ago earnings of 74 cents. But it
beat the Zacks Consensus Estimate of 41 cents. Profit slid 32%
year over year to $482 million, hurt by lower prices.
Currently, Barrick retains a Zacks Rank #3 (Hold).
Other companies in the mining industry with a favorable Zacks
NovaGold Resources Inc.
) and P
retium Resources Inc.
). Both carry a Zacks Rank #2 (Buy).
BARRICK GOLD CP (ABX): Free Stock Analysis
FREEPT MC COP-B (FCX): Free Stock Analysis
NOVAGOLD RSRCS (NG): Free Stock Analysis
PRETIUM RES INC (PVG): Free Stock Analysis
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