Barrick Gold Corporation
) adjusted earnings (excluding one-time items) for the first
quarter of 2014 plummeted to 20 cents per share from 92 cents in
the year-ago quarter but managed to beat the Zacks Consensus
Estimate by a penny. Lower metal prices and a decline in gold
sales volumes led to the decline in earnings.
On a reported basis, net income in the first quarter was $88
million or 8 cents per share, down roughly 90% from net income of
$847 million or 85 cents per share in the prior-year quarter.
Profit for the reported quarter includes $113 million in
unrealized foreign currency translation losses, $30 million in
demobilization costs associated with the ramp-down of the
Pascua-Lama mine and $18 million in gains on non-hedge derivative
Revenues fell around 22.6% year over year to $2,632 million in
the reported quarter and missed the Zacks Consensus Estimate of
$2,637 million. Average realized price of gold decreased 21.1%
year over year to $1,285 per ounce. All-in costs declined 31.5%
to $933 per ounce while all-in sustaining costs fell roughly
10.7% to $833 per ounce in the reported quarter.
Gold production fell to 1.59 million ounces in the quarter
from 1.8 million ounces a year ago. Copper production declined to
104 million pounds from 127 million pounds in the prior-year
The Goldstrike mine in the North American region produced 0.26
million ounces of gold in the quarter, up 13.9% year over year,
at an average all-in sustaining costs (AISC) of $755 per ounce.
The Cortez mine produced 0.23 million ounces, down 33.8% year
over year. Production at the Pueblo Viejo increased 65.6%
to 0.16 million ounces. Production at Lagunas Norte and
Veladero mines declined 7.6% and 22.9% year over year,
respectively. In North America, Other mines production increased
9.9% to 0.22 million ounces.
The region produced 0.31 million ounces in the quarter compared
with 0.45 million ounces in the year-ago quarter. AISC was $847
per ounce, down from $1,076 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 0.11 million ounces in the
year-ago quarter. AISC was $1,131 per ounce in the quarter, down
28.3% year over year.
Cash and cash equivalents stood at $2,672 million as of Mar
31, 2014, up roughly 14.1% from $2,342 million as of Mar 31,
2013. Total debt was roughly $13 billion, down around 8% from
$14.1 billion a year ago.
Suspension of Pascua-Lama Mine
During fourth-quarter 2013, Barrick temporarily suspended
construction activities at the Pascua-Lama mine, barring the
requisite activities for environmental protection and regulatory
compliance. Earlier in 2013, Chile's environmental regulator
halted construction on its side of the project, and imposed
sanctions citing "serious violations" of its environmental
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
Barrick continues to take initiatives to optimize its
portfolio and lower costs. The company has divested non-core
assets for a total consideration of over $1 billion since Jul
2013, including the sale of the Kanowna and Plutonic mines in
Australia and its 33% stake in the Marigold mine in Nevada in
Barrick also reduced 10% equity interest in ABG during the
quarter, leveraging the substantial improvement in ABG's share
price in 2014 and creating additional liquidity in the
Barrick is in the process of completing advanced scenario
plans for a range of metal price environments, which will enable
it to respond and adapt rapidly to changes in market
For 2014, Barrick has reaffirmed its gold production and AISC
guidance. It expects gold production in the range of 6-6.5
million ounces. Barrick expects AISC to be $920-$980 per
The five core mines are expected to contribute about 60% of
total production in 2014 at an average AISC of $750-$800 per
ounce. Barrick remains on track to achieve run rate for annual
savings goal of $500 million by the end of 2014.
The company reduced its copper guidance for 2014 to 410-440
million pounds from 470-500 million ponds to reflect the
processing disruption at Lumwana. C1 cash cost guidance remains
unchanged at $1.90-$2.10 per pound.
Currently, Barrick retains a Zacks Rank #3 (Hold).
Some better-ranked stocks in the gold mining industry include
AngloGold Ashanti Ltd. (
Gold Fields Ltd. (
Lake Shore Gold Corp.
), each with a Zacks Rank #1 (Strong Buy).
BARRICK GOLD CP (ABX): Free Stock Analysis
ANGLOGOLD LTD (AU): Free Stock Analysis
GOLD FIELDS-ADR (GFI): Free Stock Analysis
LAKE SHORE GOLD (LSG): Free Stock Analysis
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