Barrick Gold Corporation (NYSE:GOLD)(TSX:ABX) today reported second
quarter production of 1.353 million ounces of gold in line with the
solid base (1.367 million ounces) set in Q1 and driven by strong
performances at Loulo-Gounkoto in Mali and Veladero in Argentina.
President and chief executive officer Mark
Bristow said at this halfway mark of the year, annual gold
production is expected to be at the upper end of the 2019 guidance
range with cost metrics at the lower end of the ranges.
Nevada Gold Mines, the joint venture launched on July 1, should
impact positively on Barrick’s production profile and is on track
to deliver synergies of up to $500 million per year in the first
five years.
Net earnings were $0.11 per share. Adjusted net
earnings of $0.09 per share1 were in line with market consensus and
debt net of cash was unchanged at $3.7 billion after payment of the
Q1 dividend. The $0.04 quarterly dividend per share was
maintained for Q2. Following the end of the quarter, Barrick
repurchased $248 million of outstanding debt due in 2020, saving
annualized interest of approximately $12 million. Net cash provided
by operating activities of $434 million remained strong.
Bristow said in the six months since the
Barrick-Randgold merger was consummated, management had made
enormous progress in building a business that would be a model of
value creation for the mining industry.
2019 Q2 Highlights
- Nevada Gold Mines launched
successfully: positively impacts group production outlook
- Adjusted net earnings of $0.091 in
line with consensus
- Debt net of cash unchanged after Q1
dividend payment
- Quarterly dividend of $0.04
maintained
- PV plant expansion pre-feasibility
study on track for year-end completion
- African operations post strong
performance
- Offer made to acquire minority
interests in Acacia
Financial and
Operating Highlights
Financial Results |
Q2 2019 |
|
Q1 2019 |
|
Q2 2018 |
|
Realized gold price2,3 |
1,317 |
|
1,307 |
|
1,313 |
|
($ per ounce) |
|
|
|
|
|
|
Net earnings (loss) |
194 |
|
111 |
|
(94 |
) |
($ millions) |
|
|
|
|
|
|
Adjusted net earnings1 |
154 |
|
184 |
|
81 |
|
($ millions) |
|
|
|
|
|
|
Net cash provided by operating activities |
434 |
|
520 |
|
141 |
|
($ millions) |
|
|
|
|
|
|
Free cash flow4 |
55 |
|
146 |
|
(172 |
) |
($ millions) |
|
|
|
|
|
|
Net earnings (loss) per share |
0.11 |
|
0.06 |
|
(0.08 |
) |
($) |
|
|
|
|
|
|
Adjusted net earnings |
0.09 |
|
0.11 |
|
0.07 |
|
per share1 ($) |
|
|
|
|
|
|
Total attributable capital |
361 |
|
361 |
|
303 |
|
expenditures5 ($
millions) |
|
|
|
|
|
|
Operating Results |
Q2 2019 |
|
Q1 2019 |
|
Q2 2018 |
|
Gold |
|
|
|
Production |
1,353 |
|
1,367 |
|
1,067 |
|
(000s of ounces) |
|
|
|
|
|
|
Cost of sales6 (Barrick's share) |
964 |
|
947 |
|
882 |
|
($ per ounce) |
|
|
|
|
|
|
Total cash costs7 |
651 |
|
631 |
|
605 |
|
($ per ounce) |
|
|
|
|
|
|
All-in sustaining costs7 |
869 |
|
825 |
|
856 |
|
($ per ounce) |
|
|
|
|
|
|
Copper |
|
|
|
Production |
97 |
|
106 |
|
83 |
|
(millions of pounds) |
|
|
|
|
|
|
Cost of sales6 (Barrick's share) |
2.04 |
|
2.21 |
|
2.45 |
|
($ per pound) |
|
|
|
|
|
|
C1 cash costs8 |
1.59 |
|
1.66 |
|
2.10 |
|
($ per pound) |
|
|
|
|
|
|
All-in sustaining costs8 |
2.28 |
|
2.46 |
|
3.04 |
|
($ per pound) |
|
|
|
|
|
|
Key
Performance Indicators
- Another strong quarter points to annual production at top end
of guidance range and costs at lower end
- Debt net of cash unchanged at $3.7bn, after payment of Q1
dividend
- Adjusted net earnings per share of $0.091 in line with
consensus
- Copper operations continue efficiency improvements with AISC8
down 7%
- Nevada Gold Mines JV closed July 1 and set to deliver forecast
synergies with positive impact on production outlook for the
year
- Pueblo Viejo progresses plant expansion prefeasibility study
expected by year end
- African and LatAm operations deliver as Loulo-Gounkoto joins
Kibali and Veladero with strong performance
- Drilling at Fourmile returns best-ever borehole intersection;
Loulo-Gounkoto and Kibali on track for further brownfields
expansion to replace depletion
- Agreement reached on Recommended Final Offer for shares in
Acacia not already owned by Barrick
- ICSID arbitration award represents significant milestone in
recognition of Reko Diq project value
- Sustainability report underscores group’s commitment to
environmental and social goals
- Decrease in Lost Time and Total Recordable Injuries from
Q1
- $0.04 per share quarterly dividend maintained for Q2
“We’ve rationalized the corporate structure;
assembled a team committed to, and capable of, achieving our
ambitious goals; established three regions for the effective
management of our global portfolio; and aligned operational
management teams with our core vision - that of delivering the best
returns by combining the best assets with the best people. In
addition to settling down the new Barrick, we delivered the Nevada
joint venture, the world’s largest gold production complex in its
richest gold field, and brokered a solution for Acacia’s long
stand-off with the Tanzanian government. That’s a lot of
boxes ticked in a short time,” he said.
"Our ongoing focus will be deepening our team
skills and building our succession initiatives. Mining is always
going to be about its human capital and that is why we invest in
the best people."
Bristow noted that Nevada Gold Mines owned three
of the world’s top 10 Tier One9 gold assets with a fourth
potentially in the making in the form of the Goldrush-Fourmile
project, as well as proven and probable reserves of more than
48 million ounces10,11,12, presenting Barrick with a host of
value-creation opportunities.
Elsewhere, Pueblo Viejo in the Dominican
Republic, another Tier One9 mine, offered what was probably the
group’s most exciting growth prospect, he said. On a 100%
basis, this is a billion-dollar plant expansion project which is
expected to deliver annual average production in excess of 800,000
ounces from 2022 to beyond 203013. In Papua New Guinea, the
extension of Porgera’s special mining lease, currently being
negotiated, should double the life of this potential Tier One9
mine, currently standing at 10 years.
Globally Barrick is pursuing an aggressive
exploration strategy which includes a renewed focus on Latin
America and in particular on the highly prospective El Indio Belt
which spans Argentina, Peru and Chile. The African assets are
on track for brownfields resource replacement and there are
opportunities for major new discoveries along the Mali-Senegal
Shear Zone and the Congolese and Tanzanian cratons. In
Nevada, exceptionally high grades intersected at Barrick’s
Fourmile project have confirmed its potential for significant
resource growth.
Bristow said after the acquisition of the Acacia
minority shareholders' interests, which should be finalized next
month, Barrick would integrate that company’s assets into its
portfolio. He cautioned that there was a great deal of work
to be done in getting to grips with the Acacia operations, which
have not been managed by Barrick; implementing the dispute solution
agreed in principle by executive chairman John Thornton and the
Tanzanian president; and rebuilding relations with in-country
stakeholders.
Conference Call and Webcast
Please join us for a conference call and webcast
today at 11:00 EDT/15:00 UTC to discuss the results.
US and Canada, 1-800-319-4610UK, 0808 101
2791International, +1 416 915-3239Webcast
The event will be available for replay online or
by telephone at 1-855-669-9658 (US and Canada) and +1 604 674-8052
(international), access code 3107.
BARRICK STRENGTHENS BOARD: APPOINTS
LORETO SILVA INDEPENDENT DIRECTOR
Barrick has appointed Loreto Silva to
the Company’s Board of Directors as an independent non-executive
director.
An accomplished legal professional, academic and
consultant, Loreto is Chile’s former Minister of Public Works and
the current chairperson of the board of ENAP, the country’s
national petroleum company. She is also a partner at the
Chilean law firm of Bofill Escobar Silva Abogados.
Loreto started her career as a lawyer for the
Chilean Chamber of Construction where she helped develop the
country’s sanitary and public works concession systems. She
specialized in public works concession contracts, competition,
water resource management as well as the development of electric,
sanitary and infrastructure projects.
In 2010, Loreto was appointed Vice Minister of
Public Works and became Minister of the department at the end of
the 2012. As Minister, she promoted and led complex
infrastructural works such as the bridge over the Chacao
Channel and the Américo Vespucio Oriente highway. She also
led the development of the National Water Resource Strategy and is
currently director of the Arbitration and Mediation Center of the
Santiago Chamber of Commerce ("CAM"), director at the
Infrastructure Policy Council ("CPI") and member of Women Corporate
Directors.
Executive chairman John Thornton says her
appointment will broaden the skills of the Board and add fresh
perspective. “We are pleased to welcome Loreto to the Barrick
Board, which will benefit from her significant knowledge of
large-scale infrastructural projects and wide-ranging experience in
legal and government affairs.”
NEVADA GOLD MINES: VALUE CREATION GETS
ANOTHER LEADER
The first half of 2019 saw three of the
biggest deals in the history of the gold mining industry: Barrick
merged with Randgold, Newmont acquired Goldcorp, and then the two
merged companies pooled their Nevadan assets in a new business
called Nevada Gold Mines. These transactions have not only
transformed the fortunes of the companies involved: they have also
changed the industry’s future shape and direction.
The logic for the Nevada joint venture had long
been obvious, indeed compelling, says Barrick president and chief
executive officer Mark Bristow, who championed the deal.
Efforts to achieve it, however, were serially scuppered by factors
unrelated to its merits, until a fresh push by the new Barrick
management team finally got the joint venture over the finish
line.
“The Barrick-Randgold union was driven by a
vision of real, sustainable value creation for all stakeholders,
and the same motivation provided the rationale for the Nevada joint
venture. The opportunities and efficiencies arising from the
combination will maximize the potential of the Nevada gold fields
and will deliver longer profitable mine lives, longer term
employment, longer term benefit sharing with local communities and
longer-term support for the state’s economy,” Bristow said.
With 10 underground mines, 12 open pits, two
autoclave facilities, two roasting facilities, four oxide mills and
five heap leach facilities, Nevada Gold Mines is the world’s
largest gold mining complex, with annual production estimated at
3.5 million to 4.0 million ounces.
Putting together this enormous and complex
organization in the few months between the announcement of the
joint venture and the launch of the new company on July 1 required
hard work and thousands of man (and woman) hours by individuals and
teams across both founding businesses.
Catherine Raw, Barrick’s chief operating officer
for North America, said integration was a simple objective but a
complex task that required an enormous effort. Nevertheless, in
that short time, a world-class leadership team was selected from
the two companies, and 7,000 employees were integrated in a company
under the banner ‘One Team. One Mission.’ In addition,
technology and system adaptations provided a near-seamless
transition for employees.
“The proximity of the operations has opened
opportunities for improved efficiencies and cost-effectiveness, and
the new company has already combined the management of Twin Creeks
with that of Turquoise Ridge and Carlin with Goldstrike. Many
efficiencies will be realized simply by removing the physical
barriers between the Barrick and Newmont Goldcorp properties,
allowing people, equipment and ore to move freely between the
sites, depending on the needs of the business,” she said.
Nevada Gold Mines has taken on Barrick’s
commitment to partnering with host communities, which it regards as
key stakeholders in the business. This includes minimizing
operational impacts and maximizing business and learning
opportunities in these communities. The support of these
stakeholders was crucial to the success of the joint venture, and
throughout the transition both companies engaged with them to share
information and hear concerns.
There were more than 2,000 such stakeholder
touchpoints, which included town-hall meetings and presentations to
city and tribal councils. Nevada Gold Mines is owned 38.5% by
Newmont Goldcorp and 61.5% by Barrick, which manages the
business.
DOI SECRETARY BERNHARDT VISITS NEVADA
GOLD MINES, REVIEWS PERMITTING PROCESS
US Secretary of the Interior David
Bernhardt has visited Nevada Gold Mines’ Cortez mine on July 23
where he saw first-hand its Deep South expansion project, a
highlight of the Department’s expedited permitting
process.
The Deep South project will extend the life of
Cortez, which has been in continuous operation since 1862 and now
ranks as one of the world’s Top 10 Tier One9 gold
mines. It is a key initiative for Nevada Gold Mines, a joint
venture launched earlier this month and owned 61.5% by Barrick,
which operates it, and 38.5% by Newmont Goldcorp.
Nevada Gold Mines’ executive managing director
Greg Walker said the company was delighted to host Secretary
Bernhardt and noted that as Deputy Secretary, he led the process
reform which helped to expedite the review of the Deep South
environmental impact statement (EIS).
“The Deep South EIS represented a significant
enhancement of the National Environment Policy Act (NEPA)
permitting process. In the past, each EIS approval required
up to 18 months for Notices of Intent and Availability. The
industry worked with the Department of the Interior (DOI) to see if
this step in the process could be streamlined and the solution
provided by then Deputy Secretary Bernhardt delivered a material
improvement,” he said.
“Some 98% of our former, current and planned
operations are on public land administered by DOI agencies and we
maintain a close and productive relationship with the Federal
Government and the State of Nevada. The Department authorizes
mining on public land and regulates landscape-scale habitat
upliftment projects. As partners with the DOI, we support the
protection of sage-grouse and rehabilitation of their habitat as
well as an outcome-based grazing pilot program, to benefit the land
and local communities.”
Walker said Nevada Gold Mines was destined to be
one of the world’s greatest gold mining operations and planned to
mine several world-class projects in its immediate and longer-term
future. These include newly identified deposits at Goldrush,
Robertson and perhaps Fourmile, as well as the expansion of the
existing ore bodies at Cortez Hills, Pipeline and other
locations. These growth projects will continue to provide a
broad range of employment opportunities for years to come.
All these projects, he said, are dependent on the NEPA process and
its continued improvement.
“Our mission is to create sustainable, long-term
value for all stakeholders, not least the state and people of
Nevada by combining best assets with best people. To achieve
this we are committed to continue building on our education,
training and upskilling programs which involve scholarships,
bursary schemes, such as leadership development and Science
Technology Engineering Art Math (STEAM) initiatives in school and
university education and vocational training institutions, as well
as on the job training with a strong focus on America’s workers,”
he said.
BEST ASSETS + BEST PEOPLE
= BEST RETURNS
To build a world-class business you need
world-class people, says Barrick president and chief executive Mark
Bristow. To get the best returns, you combine the best assets
with the best people, which is why Barrick has such a strong focus
on attracting, retaining and developing a highly skilled and
engaged workforce.
The company offers internal and external
development programs for employees while leadership and management
training is provided through top universities.
It also caters to the next generation of
leaders. Barrick currently hosts some 100 university students
at its operations, providing them with on-the-job learning to
complement their studies. These internships also enable the
company to assess their potential as future employees.
New graduates are targeted through recruitment
programs at 20 universities globally. Those who join the
company fresh from university, or have less than three years’
mining experience, are equipped for their careers through a two- to
three-year mentor-based learning program. The recently
introduced operator excellence curriculum provides technical
training for all the trades needed at a mine. It has been
successfully piloted at Porgera and in the Dominican Republic and
additional sites are in the works.
GOVERNOR STEVE
SISOLAK VISITS NEVADA GOLD
MINES’ WORLD CLASS MINE
Nevada Governor Steve Sisolak recently
joined Barrick President and CEO Mark Bristow in hosting a meeting
of local, regional, and tribal leaders in Elko, Nevada. As Chairman
of Nevada Gold Mines, Bristow updated the community stakeholders on
progress with the joint venture between Barrick Gold Corporation
and Newmont Goldcorp Corporation.
The event underscored the long-term benefits of
the joint venture launched in July this year. The new company is
owned 61.5% and operated by Barrick, and owned 38.5% by Newmont
Goldcorp.
Speaking to the community leaders, Mark Bristow
said the joint venture partners were eager to demonstrate the
lasting value the company would bring to the state.
“Nevada Gold Mines is an opportunity to generate
additional long-term value for our shareholders, employees and the
communities of Nevada,” he said
“It positions Northern Nevada as the world’s
greatest gold mining complex. By combining the assets, talents and
expertise of Barrick and Newmont, the joint venture will extend
employment and economic opportunities in the region much further
than what each company could have done on its own. There is a
reason Nevada is an attractive destination for mining investment
and it’s not only because of the state’s mineral endowment. Here we
also enjoy a fruitful, rewarding partnership with the state and
federal government in growing a responsible, safe and productive
industry for our local communities,” Bristow said.
Earlier in the day, Governor Sisolak visited the
Cortez mine site, his first visit to a Tier One9 mine. Cortez
has been continuously mined since 1862 and demonstrates the
magnitude of the industry in Northern Nevada as an economic driver
for the state through the capital involved in running modern mining
operations, environmental safeguards, employee safety, and job
security.
AUTOMATION: THE FUTURE OF
MINING
Kibali, the youngest mine in the Barrick
stable, was designed for automated mining, and the successful
system it has installed underground and is still refining, has made
it a global leader in this field. This will now be used as
the model for the digitalization of automated mining across the
group.
The backbone of Kibali’s underground operation
is Sandvik’s Automine Multi Fleetsystem, supervised on surface by a
single operator. In a world first, it allows a fleet of up to
five LHDs (Load, haul, dump machines) to be operated autonomously,
750m below the surface, within the same 6m x 6m production drive
while utilizing designated passing bays to maintain traffic
flow. A similar system is used in the production levels to
feed the ore passes.
Another ambitious and world leading project
being pioneered at the Nevada mines is surface haulage
automation. Initially none of the Original Equipment
Manufacturers (OEM) wanted to engage in the project, due to the
mammoth task of retrofitting an autonomous system to a 20-year-old
fleet of ultra-class trucks and the technological limitations that
come with that age of machine. Barrick found another partner
that specialized in autonomous solutions outside the mining
industry and has now successfully completed a proof of concept
(POC) utilizing five haulage units that have delivered over 5.5
million tonnes, faster than any other similar POC in the
industry.
With the ongoing development of these and
various other autonomous operating systems in Barrick, the vision
is to integrate these pockets of success and progress in a
state-of-the-art system where highly trained operators with a
uniform skill set manage all the operations from surface or remote
sites.
Glenn Heard, Barrick’s group executive for
mining adds, “Barrick is also rolling out a single information
system across its operations, including Nevada Gold Mines.”
President and chief executive Mark Bristow said
access to real-time data integrated across the organization is an
essential requirement for pro-active decision-making and management
agility. “Real time data is key for the effective management
of every function from parts procurement to predictive equipment
maintenance,” says Bristow.
BARRICK COMMITS TO DELIVERING MASSAWA FOR
BENEFIT OF ALL STAKEHOLDERS
Barrick president and chief executive
Mark Bristow has met Senegalese President Macky Sall to discuss how
best to bring the Massawa gold project to account in partnership
with the country’s government.
Massawa and its associated orebody, Sofia, were
discovered by Randgold Resources, since merged with Barrick, which
invested $96.2 million in a feasibility study. Subsequent to
the original feasibility model, an update of reserve pricing to
$1,200/oz resulted in a total Probable Mineral Reserve of 20.9Mt @
3.94g/t for 2.6Moz as at December 31, 2018 (100% basis)14, with
lower strip ratios and higher proportions of low cost ore fed to
the plant, relative to the $1,000/oz Mineral Reserve.
The feasibility study also defined additional
upside within Massawa’s $1,500/oz Mineral Resource base including
an Indicated Mineral Resource of 23Mt @ 4.00g/t for 3.0Moz and an
Inferred Mineral Resource of 6.3Mt @ 3.0g/t for 0.6Moz, as at
December 31, 2018 (100% basis)15. Ongoing exploration in 2019
has identified additional opportunities to further add to the
project inventory. The project’s environmental impact study
has been approved and a mining permit application and plan have
been submitted to the government.
Bristow says it is clear that Massawa offers
enormous potential value to Barrick’s shareholders, future
investors and its Senegalese stakeholders. It also represents
an opportunity to further develop Senegal’s fledgling gold mining
industry.
“Barrick is committed to delivering Massawa for
the benefit of all stakeholders. We are now addressing how
best to realize the full value of this asset in cooperation with
the government,” he said.
Barrick, through Randgold, has invested $141
million in exploration in Senegal since 2002. In addition to
Massawa, Barrick has a large exploration program adjacent to
Senegal’s border with Mali and close to its Loulo-Gounkoto complex
as part of its Bambadji joint venture.
BARRICK BUILDS PLATFORM
FOR NEW GROWTH IN LATIN AMERICA
The renewed commitment of Barrick to
Latin America, designed to optimize its existing operations and
create a platform for a next generation of mines, has made
significant progress since its launch at the beginning of this
year, says president and chief executive Mark Bristow.
Speaking at a meeting with local community
leaders and media in San Juan, Argentina, Bristow said the
company’s assets in the region were a major part of its global
portfolio and there was enormous potential for new discoveries
capable of amplifying Barrick’s ability to create real value for
all its stakeholders.
“Barrick holds a highly prospective land
package, with mining rights covering some 34,000 hectares, in the
El Indio gold belt. This legendary gold province, which spans
Argentina, Chile and Peru, has already yielded five significant
discoveries and we believe its mineral wealth still offers a very
substantial upside,” he said.
“We have a new regional exploration strategy
that is being implemented by a best-in-class team drawn from the
merged Barrick and Randgold. In Argentina alone, we plan to
invest more than $30 million in exploration over the next two
years.”
Turning to the operations, Bristow said the
current expansion of Pueblo Viejo is expected to maintain the
mine’s Tier One9 status for years to come. At Veladero, work
to reclaim its full potential and extend its life was already
showing results, with the mine increasing production by 13,000
ounces (100% basis) in the second quarter relative to Q1. He
noted that over the past 14 years Veladero had contributed some
$8.9 billion to the Argentine economy through taxes, royalties,
salaries and payments to local suppliers. In addition, the
mine has established a new trust fund that could deliver more than
$70 million in community infrastructure between 2020 and 2028,
depending on production. At Pascua-Lama, the focus is on
going back to basics in order to review the original project’s
parameters and defining its future potential.
In Chile, the Norte Abierto and Alturas projects
are progressing, while in Peru the Lagunas Norte mine is being
placed on care and maintenance while the team assesses the sulphide
resource potential, and at Pierina closure planning is
continuing.
Bristow said Barrick acknowledged that there
were legacy challenges in each of these countries. It was
engaging with their governments and communities to resolve these
and to build productive new partnerships with its hosts to ensure
that the new value that is created benefits all stakeholders.
“We are an organization that has grown out of
pioneering exploration, discoveries and development. Given
our established presence here, our local geological knowledge and
exploration skills, we are committed to becoming a leader in
the region,” he said.
KIBALI MARKS A DECADE OF VALUE CREATION
IN THE DRC
The Kibali gold mine remains on track at
the year’s halfway point to meet or beat its production forecast of
750,000 ounces for 2019, says Mark Bristow, president and
chief executive of Barrick.
Speaking at a briefing for local media, Bristow
said this year marked the 10th anniversary of the acquisition
of the Moto project which since then has been developed into one of
the largest gold mines in the world, contributing $2.7 billion
to the Congolese economy in the process.
It is also now a full year since Kibali became
the owner-operator of its underground mine, which ranks as one of
the most advanced in the global industry in terms of
automation. The system is currently being developed to the
next technological level, where it will allow manned and unmanned
operations within the same area.
Bristow said a significant feature of autonomous
mining was that it had involved the transfer of specialist
technical skills from expatriate instructors to Kibali’s Congolese
workforce. More than 90% of Kibali’s
5,000 employees and contractors, including its management, are
Congolese nationals.
It is also making a substantial contribution to
the promotion of the local economy through its support of Congolese
contractors and suppliers, which has turned the north-east of the
country into a real commercial hub. During the first half of
this year, Kibali paid some $79 million to its Congolese
business partners. In addition, it continues to develop the
infrastructure around the mine through initiatives such as the
Durba asphalt project which is paving a section of the main
national road to Uganda which runs through the town center.
Ambitious agribusiness projects designed to deliver sustainable
benefits to the local community are also being advanced.
“Ten years ago, we went to a remote part of
Africa and found what we believed was a real world-class
opportunity but one which would require a major investment as well
as a lot of courage to develop. That opportunity became
Kibali, which poured its first gold in September 2013 and
ramped up to full production during 2018,” Bristow said.
“We invested in the DRC without any incentives
provided by the government, only a clear and equitable mining
code. Last year, however, the then government unilaterally
imposed a new code which we believe puts the Congolese mining
industry at risk and could discourage future investment. We
continue to engage with the government on this issue, and were
encouraged when the new President, his excellency
Felix Tshisekedi, outlined his vision, of attracting foreign
investment and developing the industry in a spirit of partnership,
to Barrick’s executive chairman John Thornton at a meeting
earlier this year. It is this partnership that enabled the
creation of Kibali and supports Barrick’s search for new
world-class gold deposits in the DRC.”
BARRICK CALLS FOR PARTNERSHIP TO SECURE
PORGERA'S FUTURE
Barrick president and chief executive
Mark Bristow says his recent meeting with prime minister James
Marape had served to confirm the need for a partnership approach to
the future of the Porgera gold mine. This was Bristow’s
second meeting with the recently elected prime minister and his
third visit to Papua New Guinea (PNG) since he joined Barrick at
the beginning of the year.
Porgera’s special mining lease expires this
month and the government is currently considering an application
for a 20-year extension by its operator, Barrick Niugini Limited, a
joint venture between Barrick and Zijin Mining Group of
China. Bristow said prime minister Marape’s view that PNG
should receive a better share of the benefits generated by the
development of its mineral resources was in line with Barrick’s own
commitment to ensuring that the value created by its operations
should reward all its stakeholders, especially its host governments
and communities.
A productive and mutually rewarding
partnership
“The people of PNG have a right to benefit from
these resources and the government is their steward. The
mining companies invest the capital and provide the expertise that
makes profitable resource development possible. This common
cause calls for a productive, mutually rewarding partnership
between the miners and their hosts. Barrick has successfully
established and maintained such relationships at its operations
worldwide,” he said.
Bristow noted that Porgera was one of the
largest mines in PNG and had been a key driver in its regional,
provincial and national economies for the past 30 years.
Employing local people, encouraging
local business
Over that time the mine has paid more than 4.3
billion Kina ($1.27 billion) in taxes and royalties to the
government and has contributed, on average, approximately 10% of
the country’s annual export income. It is one of the largest
employers in the country, with more than 3,100 full-time PNG
employees, 1,000 of them recruited in the Porgera region. It
has spent 1.2 billion Kina ($353 million) with Porgera businesses,
helping hundreds of them to grow. The Enga provincial
government and Porgera landowners have also benefited directly from
their part-ownership of the mine, earning more than 1 billion Kina
($294 million) in equity cash payments.
“Our presence here has also been a force for
good in many other ways, and the development projects and education
and training initiatives we have funded, including our donations,
to the total value of 544 million Kina ($160 million) have provided
schools, health services, water, power, bridges and roads, changing
the lives of many for the better. The imminent reopening of
the much-needed Paiam hospital in Porgera, made possible by the
mine’s financial and technical support, is the most recent example
of our commitment to the community,” Bristow said.
Local Paiam hospital being
reopened
The Paiam hospital has been extensively
refurbished. Since the hospital’s closure in 2017, Barrick Niugini
Limited (BNL), which operates the Porgera mine, has joined the Enga
Provincial Health Authority’s efforts to reinstate the much-needed
facility, funding new equipment to the amount of more than Kina 1.9
million ($575 000). BNL also sourced and supplied the
equipment, which was installed by the mine’s maintenance teams.
“Through BNL, Barrick and Zijin Mining will
continue to work with the Enga Provincial Government to establish
ongoing financial, technical and expertise support to ensure the
sustainability of the hospital and the healthcare it provides to
the people of the Porgera Valley,” said Bristow.
Bright future for Porgera
He said Barrick and its joint venture partner
Zijin saw a bright future ahead for Porgera. It is a
world-class gold deposit and with the right level of investment and
appropriate mining technology combined with prudent management,
there are opportunities to maintain and even increase production
while continuing to curb costs.
“I also travelled to the mine, where I continued
the discussions I had with government with our local
stakeholders. I am confident that we shall be able to reach a
broad agreement on the terms of the lease extension, and that we
shall develop the kind of partnership that will ensure that Porgera
continues to benefit the country and community for many years to
come,” he said.
COURT DECISION ALLOWS CONTINUED MINING AT
PORGERA
The National Court of Papua New Guinea ruled on
August 2nd that the provisions of the country’s 1992 Mining
Act applied to the Porgera gold mine, thus allowing it to continue
operating while the application to extend its Special Mining Lease
is being considered. The current lease expires on
August 16, 2019.
Porgera is operated by Barrick Niugini Limited,
a joint venture between Barrick and Zijin Mining Company. At
the time, Barrick president and chief executive Mark Bristow and
Zijin executive director and senior vice-president George Fang were
in Papua New Guinea to discuss the proposed extension with the
government and the Porgera Special Mining Lease landowners.
Bristow and Fang welcomed the court’s ruling,
saying it allowed for the continuation of their operations at
Porgera post August 16th, which would enable the mine to continue
delivering substantial benefits to communities and landowners in
the Porgera Valley, as well as to the national and provincial
governments, while the SML Extension was finalized. The
ruling also confirmed that Porgera operated under the
1992 Mining Act and was entitled to seek an extension.
They noted that Porgera was one of the largest
mines in PNG and had been a key driver in its regional, provincial
and national economies for the past 30 years. Over that
time, it has paid more than 4.3 billion Kina
($1.27 billion) in taxes and royalties to the government and
has contributed, on average, 10% of the country’s export
income. It is also one of the largest employers in the
country, with more than 3,100 PNG employees. It has
spent 1.2 billion Kina ($353 million) with local
businesses and paid 1 billion Kina ($294 million) in
equity cash to the Enga provincial government and Porgera
landowners, who are part-owners of the mine.
TWO DECADES OF VALUE DELIVERY AND
PARTNERSHIP IN MALI
Twenty years after Morila started
production, the Barrick owned and operated gold mines in Mali
continue to make a major contribution to the country’s economy and
lead the growth of its mining industry, says president and chief
executive Mark Bristow.
Speaking at a recent briefing at the mine for
local media, Bristow said while Morila was heading for closure
after producing 6.8 million ounces of gold, the Loulo-Gounkoto
complex ranked as one of the world’s top 10 Tier One9
gold mines and during the past quarter again delivered the greatest
production improvement in Barrick’s global portfolio. In
total, Randgold and its successor have spent $160 million on
exploration and contributed approximately $6.5 billion to the
greater economy with taxes, royalties and dividends totaling $2.6
billion. The company’s contribution represented approximately
6% of Mali’s GDP in 2018. Bristow noted that the government
and Barrick’s Mali management team had made progress in resolving
outstanding tax disputes and the company expected to conclude the
agreed mediation process soon.
At the year’s halfway mark, he said,
Loulo-Gounkoto was well on its way to achieve its 2019 production
guidance of 690,000 ounces of gold16. Continuing brownfields
exploration around its three main orebodies was confirming the
potential to replace depleted reserves, supporting and possibly
extending the complex’s 10-year plan. Barrick is also hunting
new orebodies along its 70-kilometer tenement straddling the
Mali-Senegal shear, which has produced more major gold discoveries
over the past 20 years than anywhere else in the world.
The Loulo-Gounkoto complex currently comprises
the Yalea and Gara underground mines and the Gounkoto super pit,
with a fourth mine in the form of an underground operation at
Gounkoto at the feasibility study stage.
The installation of a 20-megawatt solar power
plant is currently under way. Bristow said this would save
the complex 10 million liters of fuel per year, reduce its carbon
footprint and provide a low-cost power source for the local
community after Loulo-Gounkoto’s eventual closure.
In other community projects, the agricultural
college established by the complex has produced its third batch of
graduates, all of whom have been placed with agribusinesses.
Nineteen schools, one for each village, have been built and
enrolment has increased to more than 5,000 against 500 when the
mine opened. Three clinics have been established in the
community and programs to fight malaria and HIV/AIDS continue to
reduce the incidence of these diseases.
To date, Loulo-Gounkoto has invested more than
$6.4 million in community development. At Morila meanwhile,
the agribusiness center designed to leave a sustainable post-mining
economy for the local community is taking its final shape.
Bristow noted that all three mines at
Loulo-Gounkoto were managed by Malian nationals. Of the
complex’s more than 4,000 employees, 95% are Malians.
“The Barrick mines have been good for Mali, not
only in terms of their contribution to the economy but also for
their world-class health, safety and environmental practices, their
substantial investment in sustainability, their support of local
suppliers and contractors, and their policy of employing and
empowering Malian citizens. For their part, Mali and its
people have been rewarding hosts and partners, and we look forward
to continuing our productive relationship with them,” he said.
BARRICK LOOKS TO THE
FUTURE IN CÔTE D’IVOIRE
Barrick is actively seeking to extend
the life of its Tongon gold mine while at the same time exploring
new opportunities elsewhere in Côte d’Ivoire, says president and
chief executive Mark Bristow.
Speaking at a briefing for local media visiting
the mine, Bristow noted that Tongon was now in its 10th year of
operations while its developer Randgold Resources, since merged
with Barrick, had been involved in Côte d’Ivoire for more than 20
years, spending in excess of $90 million (CFA 52 billion) on
exploration alone during that time.
“Tongon was discovered and developed in the
midst of a civil war and since then has had to contend with almost
every conceivable challenge including social and political unrest
in the region, a protracted work stoppage and an erratic power
supply. Thanks to a committed and courageous management team
- comprised almost entirely of Ivorian nationals - the mine has
nevertheless been consistently profitable, delivering significant
value to all its stakeholders and pointing the way for the growth
of the country’s mining industry and economy,” Bristow said.
“On current reserves, Tongon has under three
years of life left, but we hope to extend that by converting
near-mine resources to reserves, exploring the potential of
satellite deposits and probing targets along the Badenou trend in
the Tongon lease area. We are also seeking to advance the
agribusiness projects designed to provide economic opportunity and
food security for the local community after the mine’s
closure.”
Elsewhere in Côte d’Ivoire, extensive
exploration work is under way on all the permits within the
company’s large portfolio, which covers the most prospective parts
of the country. Bristow said the success of this program
depended in part on the government’s continued support in the
processing of applications and facilitating access to
permits. He added that since the President had appointed a
dedicated Minister of Mines, there had been a significant change in
how the government was working with the industry to address key
issues that had proved to be impediments in the past.
Turning to the mine’s current performance,
Bristow said Tongon had rebuilt the capacity compromised by last
year’s extended work stoppages, and at the halfway stage of 2019
was on track to achieve its production target of approximately
290,000 ounces of gold. Its continuing engagement with the
government and the national power utility has resulted in a
significant improvement in the stability of the power supply on the
back of the expansion of the regional infrastructure. It is
also maintaining a positive industrial relations climate on the
mine.
The mine’s safety record remains exemplary and
to date it has worked more than 8.7 million Lost-Time Injury-Free
Hours. Its safety and environmental certifications have been
renewed and its water management has improved further. In
conjunction with an NGO, Tongon continues effectively to manage
public health on the mine and in the surrounding community through
malaria and HIV/AIDS prevention programs.
Appendix 12019 Operating and Capital
Expenditure Guidance
GOLD PRODUCTION AND COSTS |
|
2019 forecast production (000s ozs) |
2019 forecast cost of sales6 ($/oz) |
2019 forecast total cash costs7 ($/oz) |
2019 forecast all-in sustaining costs7 ($/oz) |
Carlin17,18 |
960 - 1,020 |
1,020 - 1,080 |
740 - 790 |
955 - 995 |
Cortez17 |
760 - 810 |
810 - 850 |
530 - 580 |
670 - 710 |
Turquoise Ridge/Twin Creeks17 |
330 - 370 |
655 - 705 |
550 - 600 |
680 - 730 |
Phoenix17 |
50 - 70 |
1,290 - 1,330 |
940 - 990 |
1,120 - 1,150 |
Long Canyon17 |
40 - 50 |
720 - 750 |
300 - 350 |
920 - 950 |
Pueblo Viejo (60%) |
550 - 600 |
780 - 830 |
465 - 510 |
610 - 650 |
Loulo-Gounkoto (80%) |
520 - 570 |
880 - 930 |
575 - 625 |
810 - 850 |
Kibali (45%) |
330 - 350 |
1,150 - 1,200 |
555 - 605 |
670 - 730 |
Kalgoorlie (50%) |
260 - 280 |
920 - 970 |
740 - 790 |
1,010 - 1,050 |
Tongon (89.7%) |
250 - 270 |
1,300 - 1,350 |
710 - 760 |
780 - 820 |
Porgera (47.5%) |
240 - 260 |
980 - 1,030 |
800 - 850 |
985 - 1,025 |
Veladero (50%) |
230 - 250 |
1,250 - 1,350 |
770 - 820 |
1,150 - 1,250 |
Hemlo |
200 - 220 |
890 - 940 |
765 - 815 |
1,100 - 1,200 |
Acacia (63.9%) |
320 - 350 |
920 - 970 |
665 - 710 |
860 - 920 |
Other Sites19 |
120 - 160 |
1,155 - 1,240 |
895 - 945 |
1,055 - 1,115 |
Total
Attributable to Barrick20,21,22 |
5,100 - 5,600 |
910 - 970 |
650 - 700 |
870 - 920 |
|
|
|
|
|
COPPER PRODUCTION AND COSTS |
|
2019 forecast production (millions lbs) |
2019 forecast cost of sales6 ($/lb) |
2019 forecast C1 cash costs8 ($/lb) |
2019 forecast all-in sustaining costs8 ($/lb) |
Lumwana |
210 - 240 |
2.25 - 2.50 |
1.80 - 2.10 |
2.75 - 3.15 |
Zaldívar (50%) |
120 - 130 |
2.40 - 2.70 |
1.65 - 1.85 |
2.00 - 2.20 |
Jabal Sayid (50%) |
45 - 60 |
2.00 - 2.30 |
1.60 - 1.90 |
1.60 - 1.90 |
Total Copper22 |
375 - 430 |
2.30 - 2.70 |
1.70 - 2.00 |
2.40 - 2.90 |
|
|
|
|
|
CAPITAL EXPENDITURES |
|
|
|
|
|
($ millions) |
|
|
|
Mine site sustaining |
1,100 - 1,300 |
|
|
|
Project |
300 - 400 |
|
|
|
Total attributable capital expenditures5 |
1,400 - 1,700 |
|
|
|
Appendix 2Production and Cost
Summary
Production and Cost Summary - Gold
|
For the three months
ended |
|
|
|
6/30/19 |
3/31/19 |
% Change |
|
|
6/30/18 |
% Change |
Barrick Nevadaa |
|
|
|
|
|
|
|
Gold produced (000s oz) |
526 |
|
572 |
|
(8) |
% |
|
|
533 |
|
(1) |
% |
Cost of sales ($/oz) |
842 |
|
780 |
|
8 |
% |
|
|
845 |
|
0 |
% |
Total cash costs ($/oz)b |
594 |
|
542 |
|
10 |
% |
|
|
553 |
|
7 |
% |
All-in sustaining costs ($/oz)b |
752 |
|
678 |
|
11 |
% |
|
|
725 |
|
4 |
% |
Cortez |
|
|
|
|
|
|
|
Gold produced (000s oz) |
280 |
|
262 |
|
7 |
% |
|
|
294 |
|
(5) |
% |
Cost of sales ($/oz) |
719 |
|
682 |
|
5 |
% |
|
|
653 |
|
10 |
% |
Total cash costs ($/oz)b |
489 |
|
433 |
|
13 |
% |
|
|
352 |
|
39 |
% |
All-in sustaining costs ($/oz)b |
561 |
|
506 |
|
11 |
% |
|
|
437 |
|
28 |
% |
Goldstrikec |
|
|
|
|
|
|
|
Gold produced (000s oz) |
181 |
|
233 |
|
(22) |
% |
|
|
170 |
|
6 |
% |
Cost of sales ($/oz) |
1,116 |
|
947 |
|
18 |
% |
|
|
1,199 |
|
(7) |
% |
Total cash costs ($/oz)b |
769 |
|
671 |
|
15 |
% |
|
|
856 |
|
(10) |
% |
All-in sustaining costs ($/oz)b |
1,088 |
|
891 |
|
22 |
% |
|
|
1,220 |
|
(11) |
% |
Turquoise Ridge (75%) |
|
|
|
|
|
|
|
Gold produced (000s oz) |
65 |
|
77 |
|
(16) |
% |
|
|
69 |
|
(6) |
% |
Cost of sales ($/oz) |
665 |
|
592 |
|
12 |
% |
|
|
802 |
|
(17) |
% |
Total cash costs ($/oz)b |
569 |
|
506 |
|
12 |
% |
|
|
692 |
|
(18) |
% |
All-in sustaining costs ($/oz)b |
667 |
|
592 |
|
13 |
% |
|
|
757 |
|
(12) |
% |
Pueblo Viejo (60%) |
|
|
|
|
|
|
|
Gold produced (000s oz) |
124 |
|
148 |
|
(16) |
% |
|
|
123 |
|
1 |
% |
Cost of sales ($/oz) |
852 |
|
696 |
|
22 |
% |
|
|
852 |
|
0 |
% |
Total cash costs ($/oz)b |
557 |
|
421 |
|
32 |
% |
|
|
524 |
|
6 |
% |
All-in sustaining costs ($/oz)b |
702 |
|
543 |
|
29 |
% |
|
|
690 |
|
2 |
% |
Loulo-Gounkoto (80%)d |
|
|
|
|
|
|
|
Gold produced (000s oz) |
147 |
|
128 |
15 |
% |
|
|
|
|
Cost of sales ($/oz) |
1,072 |
|
1,052 |
|
2 |
% |
|
|
|
|
Total cash costs ($/oz)b |
598 |
|
684 |
|
(13) |
% |
|
|
|
|
All-in sustaining costs ($/oz)b |
811 |
|
840 |
|
(3) |
% |
|
|
|
|
Kibali (45%)d |
|
|
|
|
|
|
|
Gold produced (000s oz) |
95 |
|
93 |
|
2 |
% |
|
|
|
|
Cost of sales ($/oz) |
868 |
|
1,202 |
|
(28) |
% |
|
|
|
|
Total cash costs ($/oz)b |
540 |
|
573 |
|
(6) |
% |
|
|
|
|
All-in sustaining costs ($/oz)b |
651 |
|
673 |
|
(3) |
% |
|
|
|
|
Kalgoorlie (50%) |
|
|
|
|
|
|
|
Gold produced (000s oz) |
57 |
|
55 |
|
4 |
% |
|
|
96 |
|
(41) |
% |
Cost of sales ($/oz) |
1,038 |
|
1,064 |
|
(2) |
% |
|
|
833 |
|
25 |
% |
Total cash costs ($/oz)b |
846 |
|
870 |
|
(3) |
% |
|
|
672 |
|
26 |
% |
All-in sustaining costs ($/oz)b |
1,204 |
|
1,185 |
|
2 |
% |
|
|
763 |
|
58 |
% |
Tongon (89.7%)d |
|
|
|
|
|
|
|
Gold produced (000s oz) |
61 |
61 |
0 |
% |
|
|
|
|
Cost of sales ($/oz) |
1,562 |
|
1,451 |
|
8 |
% |
|
|
|
|
Total cash costs ($/oz)b |
750 |
|
799 |
|
(6) |
% |
|
|
|
|
All-in sustaining costs ($/oz)b |
802 |
|
836 |
|
(4) |
% |
|
|
|
|
Production and Cost Summary - Gold
(continued)
|
For the three months
ended |
|
|
6/30/19 |
3/31/19 |
% Change |
|
6/30/18 |
% Change |
|
Porgera (47.5%) |
|
|
|
|
|
|
|
Gold produced (000s oz) |
61 |
|
66 |
|
(8) |
% |
|
41 |
|
49 |
% |
|
Cost of sales ($/oz) |
1,032 |
|
1,031 |
|
0 |
% |
|
1,233 |
|
(16) |
% |
|
Total cash costs ($/oz)b |
893 |
|
854 |
|
5 |
% |
|
846 |
|
6 |
% |
|
All-in sustaining costs ($/oz)b |
1,112 |
|
978 |
|
14 |
% |
|
1,183 |
|
(6) |
% |
|
Veladero (50%) |
|
|
|
|
|
|
|
Gold produced (000s oz) |
75 |
|
70 |
|
7 |
% |
|
78 |
|
(4) |
% |
|
Cost of sales ($/oz) |
1,186 |
|
1,195 |
|
(1) |
% |
|
984 |
|
21 |
% |
|
Total cash costs ($/oz)b |
746 |
|
713 |
|
5 |
% |
|
534 |
|
40 |
% |
|
All-in sustaining costs ($/oz)b |
1,046 |
|
1,100 |
|
(5) |
% |
|
946 |
|
11 |
% |
|
Hemlo |
|
|
|
|
|
|
|
Gold produced (000s oz) |
55 |
|
55 |
|
0 |
% |
|
38 |
|
45 |
% |
|
Cost of sales ($/oz) |
953 |
|
906 |
|
5 |
% |
|
1,277 |
|
(25) |
% |
|
Total cash costs ($/oz)b |
822 |
|
769 |
|
7 |
% |
|
1,184 |
|
(31) |
% |
|
All-in sustaining costs ($/oz)b |
1,015 |
|
915 |
|
11 |
% |
|
1,453 |
|
(30) |
% |
|
Acacia (63.9%) |
|
|
|
|
|
|
|
Gold produced (000s oz) |
101 |
|
67 |
|
51 |
% |
|
86 |
|
17 |
% |
|
Cost of sales ($/oz) |
920 |
|
1,114 |
|
(17) |
% |
|
877 |
|
5 |
% |
|
Total cash costs ($/oz)b |
659 |
|
850 |
|
(22) |
% |
|
688 |
|
(4) |
% |
|
All-in sustaining costs ($/oz)b |
792 |
|
1,023 |
|
(23) |
% |
|
918 |
|
(14) |
% |
|
Lagunas Norte |
|
|
|
|
|
|
|
Gold produced (000s oz) |
39 |
|
35 |
|
11 |
% |
|
65 |
|
(40) |
% |
|
Cost of sales ($/oz) |
952 |
|
1,304 |
|
(27) |
% |
|
657 |
|
45 |
% |
|
Total cash costs ($/oz)b |
732 |
|
637 |
|
15 |
% |
|
428 |
|
71 |
% |
|
All-in sustaining costs ($/oz)b |
998 |
|
1,018 |
|
(2) |
% |
|
662 |
|
51 |
% |
|
Golden Sunlight |
|
|
|
|
|
|
|
Gold produced (000s oz) |
6 |
|
7 |
|
(14) |
% |
|
7 |
|
(14) |
% |
|
Cost of sales ($/oz) |
2,336 |
|
2,174 |
|
7 |
% |
|
1,879 |
|
24 |
% |
|
Total cash costs ($/oz)b |
2,037 |
|
1,974 |
|
3 |
% |
|
1,928 |
|
6 |
% |
|
All-in sustaining costs ($/oz)b |
2,434 |
|
2,471 |
|
(1) |
% |
|
2,138 |
|
14 |
% |
|
Morila (40%)d |
|
|
|
|
|
|
|
Gold produced (000s oz) |
6 |
|
10 |
|
(40) |
% |
|
|
|
|
Cost of sales ($/oz) |
2,585 |
|
1,445 |
|
79 |
% |
|
|
|
|
Total cash costs ($/oz)b |
1,446 |
|
1,157 |
|
25 |
% |
|
|
|
|
All-in sustaining costs ($/oz)b |
1,449 |
|
1,157 |
|
25 |
% |
|
|
|
|
Total Attributable to Barrick |
|
|
|
|
|
|
|
Gold produced (000s oz) |
1,353 |
|
1,367 |
|
(1) |
% |
|
1,067 |
|
27 |
% |
|
Cost of sales ($/oz)e |
964 |
|
947 |
|
2 |
% |
|
882 |
|
9 |
% |
|
Total cash costs ($/oz)b |
651 |
|
631 |
|
3 |
% |
|
605 |
|
8 |
% |
|
All-in sustaining costs ($/oz)b |
869 |
|
825 |
|
5 |
% |
|
856 |
|
2 |
% |
|
- Represents the combined results of Cortez, Goldstrike
(including our 60% share of South Arturo) and, starting in the
first quarter of 2019, our 75% interest in Turquoise Ridge.
- These are non-GAAP financial performance measures with no
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other issuers. For further
information and a detailed reconciliation of each non-GAAP measure
used in this of the press release to the most directly comparable
IFRS measure, please see endnote 7.
- Includes production and sales from South Arturo on a 60% basis,
which reflects our equity share.
- These sites did not form a part of the Barrick consolidated
results in the three months ended June 30, 2018 as these sites were
acquired as a result of the Merger.
- Cost of sales per ounce (Barrick’s share) is calculated as cost
of sales - gold on an attributable basis (excluding Pierina)
divided by gold equity ounces sold.
Production and Cost Summary -
Copper
|
For the three months
ended |
|
June 30, 2019 |
March 31, 2019 |
% Change |
|
6/30/18 |
% Change |
|
Lumwana |
|
|
|
|
|
|
|
Copper production (millions lbs) |
49 |
|
61 |
|
(20) |
% |
|
47 |
|
4 |
% |
|
Cost of sales ($/lb) |
2.07 |
|
2.16 |
|
(4) |
% |
|
2.43 |
|
(15) |
% |
|
C1 cash cash costs ($/lb)a |
1.70 |
|
1.67 |
|
2 |
% |
|
2.16 |
|
(21) |
% |
|
All-in sustaining costs ($/lb)a |
2.78 |
|
2.79 |
|
0 |
% |
|
3.13 |
|
(11) |
% |
|
Zaldívar
(50%) |
|
|
|
|
|
|
|
Copper production (millions lbs) |
32 |
|
28 |
|
14 |
% |
|
23 |
|
39 |
% |
|
Cost of sales ($/lb) |
2.32 |
|
2.68 |
|
(13) |
% |
|
2.69 |
|
(14) |
% |
|
C1 cash cash costs ($/lb)a |
1.61 |
|
1.91 |
|
(16) |
% |
|
2.19 |
|
(26) |
% |
|
All-in sustaining costs ($/lb)a |
1.85 |
|
2.12 |
|
(13) |
% |
|
2.64 |
|
(30) |
% |
|
Jabal Sayid (50%) |
|
|
|
|
|
|
|
Copper production (millions lbs) |
16 |
|
17 |
|
(6) |
% |
|
13 |
|
23 |
% |
|
Cost of sales ($/lb) |
1.45 |
|
1.55 |
|
(6) |
% |
|
1.84 |
|
(21) |
% |
|
C1 cash cash costs ($/lb)a |
1.22 |
|
1.10 |
|
11 |
% |
|
1.50 |
|
(19) |
% |
|
All-in sustaining costs ($/lb)a |
1.31 |
|
1.30 |
|
1 |
% |
|
2.30 |
|
(43) |
% |
|
Total Copper |
|
|
|
|
|
|
|
Copper production (millions lbs) |
97 |
|
106 |
|
(8) |
% |
|
83 |
|
17 |
% |
|
Cost of sales ($/lb)b |
2.04 |
|
2.21 |
|
(8) |
% |
|
2.45 |
|
(17) |
% |
|
C1 cash cash costs ($/lb)a |
1.59 |
|
1.66 |
|
(4) |
% |
|
2.10 |
|
(24) |
% |
|
All-in sustaining costs ($/lb)a |
2.28 |
|
2.46 |
|
(7) |
% |
|
3.04 |
|
(25) |
% |
|
- These are non-GAAP financial performance measures with no
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other issuers. For further
information and a detailed reconciliation of each non-GAAP measure
used in this section of the press release to the most directly
comparable IFRS measure, please see endnote 8.
- Cost of sales per pound (Barrick’s share) is calculated as cost
of sales - copper plus our equity share of cost of sales
attributable to Zaldívar and Jabal Sayid divided by copper pounds
sold.
Appendix 32019 Outlook Assumptions and
Economic Sensitivity Analysis23
|
2019 Guidance Assumption |
Hypothetical Change |
Impact on EBITDA (millions) |
Impact on AISC7,8 |
Gold revenue, net of
royalties |
$1,250/oz |
+/- $100/oz |
+/- $ 253 |
+/- $ 4/oz |
Copper
revenue, net of royalties |
$2.75/lb |
+/- $0.50/lb |
+/- $ 91 |
+/- $ 0.04/lb |
|
|
|
|
|
Gold
all-in sustaining costs7 |
|
|
|
|
WTI crude oil price24 |
$65/bbl |
+/- $10/bbl |
+/- $ 20 |
+/- $ 8/oz |
Australian dollar exchange
rate |
0.75:1 |
+/- 10% |
+/- $ 13 |
+/- $ 5/oz |
Argentine peso exchange
rate |
46:1 |
+/- 10% |
+/- $ 4 |
+/- $ 2/oz |
Canadian dollar exchange
rate |
1.30:1 |
+/- 10% |
+/- $ 15 |
+/- $ 6/oz |
European euro exchange rate |
1.15:1 |
+/- 10% |
+/- $ 1 |
+/- $ 0/oz |
|
|
|
|
|
Copper
all-in sustaining costs8 |
|
|
|
|
WTI crude oil price |
$65/bbl |
+/- $10/bbl |
+/- $ 3 |
+/- $ 0.02/lb |
Chilean
peso exchange rate |
650:1 |
+/- 10% |
+/- $ 5 |
+/- $ 0.03/lb |
Technical Information
The scientific and technical information
contained in this press release has been reviewed and approved by
Steven Yopps, MMSA, Director - Metallurgy, North America; Chad
Yuhasz, P.Geo, Mineral Resource Manager, Latin America and
Australia Pacific; Simon Bottoms, CGeol, MGeol, FGS, MAusIMM,
Mineral Resources Manager, Africa and Middle East; Rodney Quick,
MSc, Pr. Sci.Nat, Mineral Resource Management and Evaluation
Executive; John Steele, CIM, Metallurgy, Engineering and Capital
Projects Executive; and Rob Krcmarov, FAusIMM, Executive Vice
President, Exploration and Growth — each a “Qualified Person” as
defined in National Instrument 43-101 – Standards of Disclosure for
Mineral Projects.
Endnotes
Endnote 1“Adjusted net
earnings” and “adjusted net earnings per share” are non-GAAP
financial performance measures. Adjusted net earnings excludes the
following from net earnings: certain impairment charges (reversals)
related to intangibles, goodwill, property, plant and equipment,
and investments; gains (losses) and other one-time costs relating
to acquisitions or dispositions; foreign currency translation gains
(losses); significant tax adjustments not related to current period
earnings; unrealized gains (losses) on non-hedge derivative
instruments; and the tax effect and non-controlling interest of
these items. The Company uses this measure internally to evaluate
our underlying operating performance for the reporting periods
presented and to assist with the planning and forecasting of future
operating results. Barrick believes that adjusted net earnings is a
useful measure of our performance because these adjusting items do
not reflect the underlying operating performance of our core mining
business and are not necessarily indicative of future operating
results. Adjusted net earnings and adjusted net earnings per share
are intended to provide additional information only and do not have
any standardized meaning under IFRS and may not be comparable to
similar measures of performance presented by other companies. They
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS. Further
details on these non-GAAP measures are provided in the MD&A
accompanying Barrick’s financial statements filed from time to time
on SEDAR at www.sedar.com and on EDGAR
at www.sec.gov.
Reconciliation of Net Earnings to Net Earnings per
Share, Adjusted Net Earnings and Adjusted Net Earnings per
Share
($
millions, except per share amounts in dollars) |
For the three months ended |
For the six months ended |
|
6/30/19 |
3/31/19 |
6/30/18 |
6/30/19 |
6/30/18 |
Net earnings (loss) attributable to equity holders of the
Company |
194 |
|
111 |
|
(94 |
) |
305 |
|
64 |
|
Impairment charges related to
intangibles, goodwill, |
12 |
|
3 |
|
59 |
|
15 |
|
61 |
|
property, plant and equipment,
and investmentsa |
|
|
|
|
|
|
|
|
|
|
Acquisition/disposition
(gains) lossesb |
(12 |
) |
0 |
|
(2 |
) |
(12 |
) |
(48 |
) |
Foreign currency translation
losses (gains) |
(6 |
) |
22 |
|
75 |
|
16 |
|
90 |
|
Significant tax adjustmentsc |
(83 |
) |
8 |
|
16 |
|
(75 |
) |
62 |
|
Other expense adjustmentsd |
58 |
|
47 |
|
43 |
|
105 |
|
37 |
|
Unrealized (gains) losses on
non-hedge derivative |
0 |
|
(1 |
) |
0 |
|
(1 |
) |
0 |
|
instruments |
|
|
|
|
|
|
|
|
|
|
Tax
effect and non-controlling interest |
(9 |
) |
(6 |
) |
(16 |
) |
(15 |
) |
(15 |
) |
Adjusted net earnings |
154 |
|
184 |
|
81 |
|
338 |
|
251 |
|
Net earnings per sharee |
0.11 |
|
0.06 |
|
(0.08 |
) |
0.17 |
|
0.05 |
|
Adjusted net earnings per sharee |
0.09 |
|
0.11 |
|
0.07 |
|
0.19 |
|
0.22 |
|
a. Net impairment charges for the
three and six month periods ended June 30, 2018 primarily relate to
the Kabanga project (a joint venture between Barrick and Glencore)
and Acacia's Nyanzaga project in Tanzania.b. Disposition gains
primarily relate to the gain on the sale of a non-core royalty
asset at Acacia for the six month period ended June 30,
2018.c. Significant tax adjustments for the three and six
months ended June 30, 2019 primarily relate to an adjustment to
deferred taxes at Veladero. For the six months ended June 30, 2018,
significant tax adjustments primarily relate to a tax audit of
Pueblo Viejo in the Dominican Republic.d. Other expense
adjustments for the three and six month periods ended June 30,
2019 primarily relate to severance costs as a result of the
implementation of a number of organizational reductions, the impact
of changes in the discount rate assumptions on our closed mine
rehabilitation provision and transaction costs related to Nevada
Gold Mines.e. Calculated using weighted average number of
shares outstanding under the basic method of earnings per
share.
Endnote 2Includes Acacia on a
63.9% basis, Pueblo Viejo on a 60% basis, South Arturo on a 60%
basis and Veladero on a 50% basis, which reflects our equity share
of production and sales. Also includes Loulo-Gounkoto on an 80%
basis, Kibali on a 45% basis, Tongon on an 89.7% basis and Morila
on an 40% basis, which reflects our equity share of production and
sales, commencing January 1, 2019, the effective date of the merger
with Randgold.
Endnote 3Realized price is a
non-GAAP financial measure which excludes from sales: unrealized
gains and losses on non-hedge derivative contracts; unrealized
mark-to-market gains and losses on provisional pricing from copper
and gold sales contracts; sales attributable to ore purchase
arrangements; treatment and refining charges; and export
duties. This measure is intended to enable Management to better
understand the price realized in each reporting period for gold and
copper sales because unrealized mark-to-market values of non-hedge
gold and copper derivatives are subject to change each period due
to changes in market factors such as market and forward gold and
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 gold and copper production. 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. Further details on
these non-GAAP measures are provided in the MD&A accompanying
Barrick’s financial statements filed from time to time on SEDAR
at www.sedar.com and on EDGAR
at www.sec.gov.
Reconciliation of Sales to Realized
Price per ounce/pound
($
millions, except per ounce/pound information in dollars) |
Gold |
Copper |
Gold |
Copper |
|
For the three months ended |
For the six months ended |
|
6/30/19 |
3/31/19 |
6/30/18 |
6/30/19 |
3/31/19 |
6/30/18 |
6/30/19 |
6/30/18 |
6/30/19 |
6/30/18 |
Sales |
1,937 |
|
1,906 |
|
1,562 |
|
103 |
|
163 |
|
112 |
|
3,843 |
|
3,205 |
|
266 |
|
223 |
Sales applicable to non- |
(240 |
) |
(224 |
) |
(171 |
) |
0 |
|
0 |
|
0 |
|
(464 |
) |
(358 |
) |
0 |
|
0 |
controlling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales applicable to
equity |
135 |
|
129 |
|
0 |
|
124 |
|
121 |
|
87 |
|
264 |
|
0 |
|
245 |
|
200 |
method investmentsa,b |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized non-hedge gold/ |
1 |
|
0 |
|
2 |
|
0 |
|
0 |
|
0 |
|
1 |
|
2 |
|
0 |
|
0 |
copper derivative
(losses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
gains |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales applicable to
Pierinac |
(26 |
) |
(26 |
) |
(32 |
) |
0 |
|
0 |
|
0 |
|
(52 |
) |
(61 |
) |
0 |
|
0 |
Treatment and
refinement |
0 |
|
0 |
|
1 |
|
25 |
|
31 |
|
29 |
|
0 |
|
1 |
|
56 |
|
60 |
charges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues – as adjusted |
1,807 |
|
1,785 |
|
1,362 |
|
252 |
|
315 |
|
228 |
|
3,592 |
|
2,789 |
|
567 |
|
483 |
Ounces/pounds sold |
1,372 |
|
1,365 |
|
1,037 |
|
96 |
|
103 |
|
74 |
|
2,737 |
|
2,108 |
|
199 |
|
159 |
(000s
ounces/millions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
pounds)c |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized
gold/copper |
1,317 |
|
1,307 |
|
1,313 |
|
2.62 |
|
3.07 |
|
3.11 |
|
1,312 |
|
1,323 |
|
2.85 |
|
3.04 |
price
per ounce/poundd |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a. Represents sales of $125 million and
$242 million, respectively, for the three and six month periods
ended June 30, 2019 (March 31, 2019: $117 million and
June 30, 2018: $nil and $nil, respectively) applicable to our
45% equity method investment in Kibali of $10 million and $22
million, respectively (March 31, 2019: $12 million and
June 30, 2018: $nil and $nil, respectively) applicable to our
40% equity method investment in Morila for gold. Represents sales
of $86 million and $167 million, respectively, for the three and
six months ended June 30, 2019 (March 31, 2019: $81
million and June 30, 2018: $69 million and $142 million,
respectively) applicable to our 50% equity method investment in
Zaldívar and $44 million and $88 million, respectively
(March 31, 2019: $44 million and June 30, 2018: $25
million and $66 million, respectively) applicable to our 50% equity
method investment in Jabal Sayid for copper.b. Sales
applicable to equity method investments are net of treatment and
refinement charges.c. Figures exclude Pierina from the
calculation of realized price per ounce as the mine is mining
incidental ounces as it enters closure.d. Realized price per
ounce/pound may not calculate based on amounts presented in this
table due to rounding.
Endnote 4“Free cash flow” is a
non-GAAP financial performance measure which deducts capital
expenditures from net cash provided by operating activities.
Barrick believes this to be a useful indicator of our ability to
operate without reliance on additional borrowing or usage of
existing cash. Free cash flow is intended to provide additional
information only and does not have any standardized meaning under
IFRS and may not be comparable to similar measures of performance
presented by other companies. Free cash flow should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. Further details on
this non-GAAP measure are provided in the MD&A accompanying
Barrick’s financial statements filed from time to time on SEDAR
at www.sedar.com and on EDGAR at www.sec.gov.
Reconciliation of Net Cash Provided by Operating
Activities to Free Cash Flow
($
millions) |
For the three months ended |
For the six months ended |
|
6/30/19 |
3/31/19 |
6/30/18 |
6/30/19 |
6/30/18 |
Net cash provided by operating
activities |
434 |
|
520 |
141 |
954 |
|
648 |
Capital expenditures |
(379) |
|
(374) |
(313) |
(753) |
|
(639) |
Free cash flow |
55 |
|
146 |
(172) |
201 |
|
9 |
Endnote 5These amounts are
presented on the same basis as our guidance and include our 60%
share of Pueblo Viejo and South Arturo, our 63.9% share of Acacia
and our 50% share of Zaldívar and Jabal Sayid. Also includes our
80% share of Loulo-Gounkoto, 89.7% share of Tongon, 45% share of
Kibali and 40% share of Morila, commencing January 1, 2019, the
effective date of the Merger.
Endnote 6Cost 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, 36.1% Acacia and 40%
South Arturo from cost of sales), divided by attributable gold
ounces sold. The non-controlling interest of 20% Loulo-Gounkoto and
10.3% of Tongon is also removed from cost of sales and our
proportionate share of cost of sales attributable to equity method
investments (Kibali and Morila) is included commencing January 1,
2019, the effective date of the Merger. 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 sold (including our
proportionate share of copper pounds sold from our equity method
investments).
Endnote 7“Total cash costs” per
ounce and “All-in sustaining costs” per ounce are non-GAAP
financial performance measures. “Total cash costs” per ounce starts
with cost of sales applicable to gold production, but excludes the
impact of depreciation, the non-controlling interest of cost of
sales, and includes by-product credits. “All-in sustaining costs”
per ounce begin with “Total cash costs” per ounce and add further
costs which reflect the additional costs of operating a mine,
primarily sustaining capital expenditures, sustaining leases,
general & administrative costs, minesite exploration and
evaluation costs, and reclamation cost accretion and amortization.
Barrick believes that the use of “total cash costs” per ounce and
“all-in sustaining costs” per ounce will assist investors, analysts
and other stakeholders 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. “Total cash costs” per
ounce and “All-in sustaining costs” per ounce are intended to
provide additional information only and do not have any
standardized meaning under IFRS. Although a standardized definition
of all-in sustaining costs was published in 2013 by the World
Gold Council (a market development organization for the gold
industry comprised of and funded by 26 gold mining companies from
around the world, including Barrick), it is not a regulatory
organization, and other companies may calculate this measure
differently. Starting from the first quarter of 2019, we have
renamed "cash costs" to "total cash costs" when referring to our
gold operations. The calculation of total cash costs is
identical to our previous calculation of cash costs with only a
change in the naming convention of this non-GAAP measure.
These measures should not be considered in isolation or as a
substitute for measures prepared in accordance with IFRS. Further
details on these non-GAAP measures are provided in the MD&A
accompanying Barrick’s financial statements filed from time to time
on SEDAR at www.sedar.com and on EDGAR
at www.sec.gov.
Reconciliation of Gold Cost of Sales to
Total cash costs, All-in sustaining costs and All-in costs,
including on a per ounce basis
($
millions, except per ounce information in dollars) |
|
For the three months ended |
For the six months ended |
|
Footnote |
6/30/19 |
3/31/19 |
6/30/18 |
6/30/19 |
6/30/18 |
Cost of sales applicable to gold production |
|
1,437 |
1,350 |
1,058 |
2,787 |
2,104 |
Depreciation |
|
(431) |
(384) |
(290) |
(815) |
(588) |
Cash cost of sales applicable to equity method investments |
|
62 |
62 |
0 |
124 |
0 |
By-product credits |
|
(23) |
(24) |
(38) |
(47) |
(74) |
Realized (gains) losses on hedge and non-hedge derivatives |
a |
(1) |
0 |
0 |
(1) |
0 |
Non-recurring items |
b |
(9) |
(20) |
(3) |
(29) |
(10) |
Other |
c |
(26) |
(20) |
(21) |
(46) |
(42) |
Non-controlling interests |
d |
(112) |
(101) |
(78) |
(213) |
(150) |
Total cash costs |
|
897 |
863 |
628 |
1,760 |
1,240 |
General & administrative costs |
|
59 |
54 |
93 |
113 |
141 |
Minesite exploration and evaluation costs |
e |
12 |
11 |
14 |
23 |
20 |
Minesite sustaining capital expenditures |
f |
267 |
253 |
235 |
520 |
466 |
Sustaining leases |
|
8 |
10 |
0 |
18 |
0 |
Rehabilitation - accretion and amortization (operating sites) |
g |
16 |
14 |
19 |
30 |
38 |
Non-controlling interest, copper operations and other |
h |
(76) |
(75) |
(100) |
(151) |
(155) |
All-in
sustaining costs |
|
1,183 |
1,130 |
889 |
2,313 |
1,750 |
Project exploration and evaluation and project costs |
e |
86 |
63 |
83 |
149 |
150 |
Community relations costs not related to current operations |
|
0 |
1 |
0 |
1 |
1 |
Project capital expenditures |
f |
108 |
120 |
106 |
228 |
206 |
Rehabilitation - accretion and amortization (non-operating
sites) |
g |
7 |
7 |
8 |
14 |
16 |
Non-controlling interest and copper operations and other |
h |
(28) |
(3) |
(3) |
(31) |
(8) |
All-in
costs |
|
1,356 |
1,318 |
1,083 |
2,674 |
2,115 |
Ounces sold - equity
basis (000s ounces) |
i |
1,372 |
1,365 |
1,037 |
2,737 |
2,108 |
Cost of sales per
ounce |
j,k |
964 |
947 |
882 |
956 |
865 |
Total cash costs per ounce |
k |
651 |
631 |
605 |
641 |
589 |
Total
cash costs per ounce (on a co-product basis) |
k,l |
663 |
644 |
630 |
654 |
613 |
All-in sustaining costs per
ounce |
k |
869 |
825 |
856 |
842 |
830 |
All-in
sustaining costs per ounce (on a co-product basis) |
k,l |
881 |
838 |
881 |
855 |
854 |
All-in costs per ounce |
k |
999 |
964 |
1,043 |
976 |
1,003 |
All-in
costs per ounce (on a co-product basis) |
k,l |
1,011 |
977 |
1,068 |
989 |
1,027 |
- Realized (gains) losses on hedge and non-hedge
derivativesIncludes realized hedge losses of $nil and
$nil, respectively, for the three and six month periods ended
June 30, 2019 (March 31, 2019: $nil and June 30,
2018: $1 million and $2 million), and realized non-hedge gains
of $1 million and $1 million, respectively, for the three and six
month periods ended June 30, 2019 (March 31, 2019: $nil
and June 30, 2018: $1 million and $2 million,
respectively). Refer to note 5 to the Financial Statements for
further information.
- Non-recurring itemsNon-recurring items in 2019
relate to organizational restructuring. These costs are not
indicative of our cost of production and have been excluded from
the calculation of total cash costs.
- OtherOther adjustments for the three and six
month periods ended June 30, 2019 include the removal of total
cash costs and by-product credits associated with our Pierina mine,
which is mining incidental ounces as it enters closure, of $19
million and $37 million, respectively (March 31, 2019: $18
million and June 30, 2018: $22 million and $43 million,
respectively).
- Non-controlling interestsNon-controlling
interests include non-controlling interests related to gold
production of $171 million and $323 million, respectively, for the
three and six month periods ended June 30, 2019
(March 31, 2019: $152 million and June 30, 2018: $112
million and $218 million, respectively). Non-controlling interests
include Pueblo Viejo and Acacia. Starting January 1, 2019, the
effective date of the Merger, non-controlling interests also
include Loulo-Gounkoto and Tongon. Refer to note 5 to the Financial
Statements for further information.
- Exploration and evaluation
costs Exploration, evaluation and project
expenses are presented as minesite sustaining if it supports
current mine operations and project if it relates to future
projects. Refer to page 71 of this MD&A.
- Capital expenditures Capital expenditures
are related to our gold sites only and are presented on a 100% cash
basis starting from January 1, 2019 and on a 100% accrued basis for
the three and six month periods ended June 30, 2018. They are
split between minesite sustaining and project capital expenditures.
Project capital expenditures are distinct projects designed to
increase the net present value of the mine and are not related to
current production. Significant projects in the current year are
stripping at Cortez Crossroads, the Goldrush exploration declines,
the Deep South Expansion, and construction of the third shaft at
Turquoise Ridge. Refer to page 70 of this MD&A.
- Rehabilitation—accretion and
amortizationIncludes depreciation on the assets related to
rehabilitation provisions of our gold operations and accretion on
the rehabilitation provision of our gold operations, split between
operating and non-operating sites.
- Non-controlling interest and copper
operations Removes general &
administrative costs related to non-controlling interests and
copper based on a percentage allocation of revenue. Also removes
exploration, evaluation and project expenses, rehabilitation costs
and capital expenditures incurred by our copper sites and the
non-controlling interest of our Acacia and Pueblo Viejo operating
segments and South Arturo. Also removes the non-controlling
interest of our Loulo-Gounkoto and Tongon operating segments
commencing January 1, 2019, the effective date of the Merger, and
includes capital expenditures applicable to equity method
investments. Figures remove the impact of Pierina. The impact is
summarized as the following:
($
millions) |
For the three months ended |
For the six months ended |
Non-controlling interest, copper operations and other |
6/30/19 |
3/31/19 |
6/30/18 |
6/30/19 |
6/30/18 |
General & administrative costs |
(23) |
(10) |
(41) |
(33) |
|
(48) |
Minesite exploration and
evaluation expenses |
0 |
(1) |
(1) |
(1) |
|
(1) |
Rehabilitation - accretion and
amortization (operating sites) |
(1) |
(1) |
(2) |
(2) |
|
(3) |
Minesite sustaining capital expenditures |
(52) |
(63) |
(56) |
(115) |
|
(103) |
All-in
sustaining costs total |
(76) |
(75) |
(100) |
(151) |
|
(155) |
Project exploration and
evaluation and project costs |
(26) |
(2) |
(3) |
(28) |
|
(6) |
Project capital expenditures |
(2) |
(1) |
0 |
(3) |
|
(2) |
All-in
costs total |
(28) |
(3) |
(3) |
(31) |
|
(8) |
i. Ounces sold - equity
basisFigures remove the impact of Pierina which is mining
incidental ounces as it enters closure.
j. Cost of sales per
ounceFigures remove the cost of sales impact of Pierina of
$44 million and $71 million, respectively, for the three and six
month periods ended June 30, 2019 (March 31, 2019: $27
million and June 30, 2018: $30 million and $62 million,
respectively),which is mining incidental ounces as it enters
closure. Cost of sales per ounce excludes non-controlling interest
related to gold production. Cost of sales applicable to gold per
ounce is calculated using cost of sales on an attributable basis
(removing the non-controlling interest of 40% Pueblo Viejo, 36.1%
Acacia and 40% South Arturo from cost of sales), divided by
attributable gold ounces. The non-controlling interest of 20%
Loulo-Gounkoto and 10.3% of Tongon is also removed from cost of
sales and our proportionate share of cost of sales attributable to
equity method investments (Kibali and Morila) is included
commencing January 1, 2019, the effective date of the Merger.
k. Per ounce
figures Cost of sales per ounce, total cash costs per
ounce, all-in sustaining costs per ounce and all-in costs per ounce
may not calculate based on amounts presented in this table due to
rounding.
l. Co-product costs per
ounce Total cash costs per ounce, all-in sustaining
costs per ounce and all-in costs per ounce presented on a
co-product basis removes the impact of by-product credits of our
gold production (net of non-controlling interest) calculated
as:
($
millions) |
For the three months ended |
For the six months ended |
|
6/30/19 |
3/31/19 |
6/30/18 |
6/30/19 |
6/30/18 |
By-product credits |
23 |
24 |
|
38 |
47 |
74 |
Non-controlling interest |
(7) |
(8) |
|
(13) |
(15) |
(24) |
By-product credits (net of non-controlling interest) |
16 |
16 |
|
25 |
32 |
50 |
Endnote 8“C1 cash costs” per
pound and “All-in sustaining costs” per pound are non-GAAP
financial performance measures. “C1 cash costs” per pound is based
on cost of sales but excludes the impact of depreciation and
royalties and includes treatment and refinement charges. “All-in
sustaining costs” per pound begins with “C1 cash costs” per pound
and adds further costs which reflect the additional costs of
operating a mine, primarily sustaining capital expenditures,
general & administrative costs and royalties and production
taxes. Barrick believes that the use of “C1 cash costs” per pound
and “all-in sustaining costs” per pound will assist investors,
analysts, and other stakeholders in understanding the costs
associated with producing copper, understanding the economics of
copper 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. “C1 cash
costs” per pound and “All-in sustaining costs” per pound are
intended to provide additional information only, do not have any
standardized meaning under IFRS, and may not be comparable to
similar measures of performance presented by other companies. These
measures should not be considered in isolation or as a substitute
for measures of performance prepared in accordance with IFRS.
Further details on these non-GAAP measures are provided in the
MD&A accompanying Barrick’s financial statements filed from
time to time on SEDAR at www.sedar.com and on EDGAR
at www.sec.gov.
Reconciliation of Copper Cost of Sales
to C1 cash costs and All-in sustaining costs, including on a per
pound basis
($
millions, except per pound information in dollars) |
For the three months ended |
For the six months ended |
|
6/30/19 |
3/31/19 |
6/30/18 |
6/30/19 |
6/30/18 |
Cost of
sales |
101 |
131 |
108 |
|
232 |
204 |
Depreciation/amortization |
(28) |
(42) |
(30) |
|
(70) |
(49) |
Treatment and refinement charges |
25 |
31 |
29 |
|
56 |
60 |
Cash cost of sales applicable to equity method investments |
69 |
66 |
59 |
|
135 |
122 |
Less: royalties and production taxesa |
(9) |
(12) |
(9) |
|
(21) |
(19) |
By-product credits |
(2) |
(3) |
(1) |
|
(5) |
(3) |
Other |
(5) |
0 |
0 |
|
(5) |
0 |
C1 cash cost
of sales |
151 |
171 |
156 |
|
322 |
315 |
General & administrative costs |
6 |
5 |
11 |
|
11 |
16 |
Rehabilitation - accretion and amortization |
3 |
3 |
3 |
|
6 |
8 |
Royalties and production taxesa |
9 |
12 |
9 |
|
21 |
19 |
Minesite exploration and evaluation costs |
1 |
2 |
1 |
|
3 |
1 |
Minesite sustaining capital expenditures |
48 |
59 |
46 |
|
107 |
88 |
Sustaining leases |
1 |
1 |
0 |
|
2 |
0 |
Inventory write-downs |
0 |
0 |
0 |
|
0 |
0 |
All-in sustaining costs |
219 |
253 |
226 |
|
472 |
447 |
Pounds sold -
consolidated basis (millions pounds) |
96 |
103 |
74 |
|
199 |
159 |
Cost of sales per poundb,c |
2.04 |
2.21 |
2.45 |
|
2.13 |
2.25 |
C1 cash cost per poundb |
1.59 |
1.66 |
2.10 |
|
1.62 |
1.98 |
All-in sustaining costs per poundb |
2.28 |
2.46 |
3.04 |
|
2.37 |
2.81 |
a. For the three and six month periods
ended June 30, 2019, royalties and production taxes include
royalties of $9 million and $21 million, respectively
(March 31, 2019: $12 million and June 30, 2018: $8
million and $17 million, respectively).b. Cost of sales per
pound, C1 cash costs per pound and all-in sustaining costs per
pound may not calculate based on amounts presented in this table
due to rounding.c. Cost of sales applicable to copper per
pound is calculated using cost of sales 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 9A Tier One Gold Asset
is a mine with a stated life in excess of 10 years with 2017
production of at least 500,000 ounces of gold and 2017 total cash
cost per ounce within the bottom half of Wood Mackenzie’s cost
curve tools (excluding state-owned and privately-owned mines). For
purposes of determining Tier One Gold Assets, total cash cost per
ounce is based on data from Wood Mackenzie as of August 31, 2018,
except in respect of Barrick’s mines where Barrick may rely on its
internal data which is more current and reliable. The Wood
Mackenzie calculation of total cash cost per ounce may not be
identical to the manner in which Barrick calculates comparable
measures. Total cash cost per ounce is a non-GAAP financial
performance measure with no standardized meaning under IFRS and
therefore may not be comparable to similar measures presented by
other issuers. Total cash cost per ounce should not be considered
by investors as an alternative to operating profit, net profit
attributable to shareholders, or to other IFRS measures. Barrick
believes that total cash cost per ounce is a useful indicator for
investors and management of a mining company’s performance as it
provides an indication of a company’s profitability and efficiency,
the trends in cash costs as the company’s operations mature, and a
benchmark of performance to allow for comparison against other
companies. Wood Mackenzie is an independent third party research
and consultancy firm that provides data for, among others, the
metals and mining industry. Wood Mackenzie does not have any
affiliation to Barrick.
Endnote 10The pro forma reserves and resources
figures of Nevada Gold Mines were derived by adding the respective
reserves and resources in respect of Nevada operations reported by
Barrick in its Q4 2018 Report and Newmont in its press release
dated February 21, 2019 reporting its 2018 Reserves and Resources
and its annual report on Form 10-K for the fiscal year ended
December 31, 2018 in respect of the relevant Nevada properties set
out in endnotes 3 and 4. The pro forma reserves and resources are
provided for illustrative purposes only. Barrick and Newmont
calculate such figures based on different standards and
assumptions, and accordingly such figures may not be directly
comparable and the pro forma reserves and resources may be subject
to adjustments due to such differing standards and assumptions. In
particular, Barrick mineral reserves and resources have been
prepared according to Canadian Institute of Mining, Metallurgy and
Petroleum 2014 Definition Standards for Mineral Resources and
Mineral Reserves as incorporated by National Instrument 43-101 –
Standards of Disclosure for Mineral Projects, which differ from the
requirements of U.S. securities laws. Newmont’s reported reserves
are prepared in compliance with Industry Guide 7 published by the
SEC, however, the SEC does not recognize the terms “resources” and
“measured and indicted resources”. Newmont has determined that its
reported “resources” would be substantively the same as those
prepared using Guidelines established by the Society of Mining,
Metallurgy and Exploration (SME) and that its reported measured and
indicated resources (combined) are equivalent to “Mineralized
Material” disclosed in its annual report on Form 10-K.
Endnote 11Reserves and resources of Barrick in
Nevada are stated on an attributable basis as of December 31, 2018
and include Goldstrike, Cortez, Goldrush, South Arturo (60%) and
Turquoise Ridge (75%). Proven reserves of 84.4 million tonnes
grading 4.36g/t, representing 11.8 million ounces of gold. Probable
reserves of 155.6 million tonnes grading 2.93g/t, representing 14.7
million ounces of gold. Measured resources of 13.5 million tonnes
grading 4.22g/t, representing 1.8 million ounces of gold. Indicated
resources of 101.6 million tonnes grading 4.34g/t, representing
14.2 million ounces of gold. Inferred resources of 28.7 million
tonnes grading 5.2g/t, representing 4.8 million ounces of gold.
Complete mineral reserve and resource data for all Barrick mines
and projects referenced in this press release, including tonnes,
grades, and ounces, as well as the assumptions on which the mineral
reserves for Barrick are reported, are set out in Barrick’s Q4 2018
Report issued on February 13, 2019.
Endnote 12Reserves and resources of Newmont in
Nevada are stated on an attributable basis as of December 31, 2018
and include Carlin, Phoenix, Lone Tree, Twin Creeks (including
Newmont’s 25% equity in Turquoise Ridge) and Long Canyon. Proven
reserves of 46.6 million tonnes grading 3.84g/t, representing 5.8
million ounces of gold. Probable reserves of 378.1 million tonnes
grading 1.32g/t, representing 16.0 million ounces of gold. Measured
resources of 19.7 million tonnes grading 2.2 g/t, representing 1.4
million ounces of gold. Indicated resources of 244.4 million tonnes
grading 1.27g/t, representing 10.0 million ounces of gold. Inferred
resources of 45.5 million tonnes grading 1.81g/t, representing 2.7
million ounces of gold. Complete mineral reserve and resource data
for all Newmont mines and projects referenced in this press
release, including tonnes, grades, and ounces, as well as the
assumptions on which the mineral reserves for Newmont are reported,
are set out in Newmont’s press release dated February 21, 2019
reporting its 2018 Reserves and Resources and its annual report on
Form 10-K for the fiscal year ended December 31, 2018.
Endnote 13See the Technical
Report on the Pueblo Viejo mine, Sanchez Ramirez Province,
Dominican Republic,dated March 19, 2018, and filed on SEDAR at
www.sedar.com and EDGAR at www.sec.gov on March 23, 2018.
Endnote 14Estimated in accordance with National
Instrument 43-101 as at December 31, 2018. For additional
information refer to Section 24.2, “Alternate Case – Ore Reserves
and Economics at $1,200/oz Gold Price” of the Technical Report for
the Massawa gold project dated as of July 23, 2019, and filed on
SEDAR at www.sedar.com on July 23, 2019 and EDGAR at www.sec.gov on
July 25, 2019.
Endnote 15Estimated in accordance with National
Instrument 43-101 as at December 31, 2018, complete mineral
resource data can be found on page 44-45 of Barrick’s 2018 Form
40-F/Annual Information Form on file with the SEC at www.sec.gov
and Canadian provincial securities regulatory authorities at
www.sedar.com.
Endnote 16On a 100% basis.
Endnote 17These five operations
are part of Nevada Gold Mines from July 1, 2019. Amounts
include Cortez (100%), Goldstrike (100%) and Turquoise Ridge (75%),
also known as Barrick Nevada, from January 1, 2019 to June 30,
2019, and Cortez, Carlin (which includes Goldstrike), Turquoise
Ridge/Twin Creeks, Phoenix and Long Canyon on a 61.5% basis from
July 1, 2019 onwards as a result of the formation of Nevada Gold
Mines with Newmont Goldcorp on July 1, 2019.
Endnote 18Includes our 60%
share of South Arturo from January 1, 2019 to June 30, 2019 and
36.9% from July 1, 2019 onwards as a result of the formation of
Nevada Gold Mines with Newmont Goldcorp on July 1, 2019.
Endnote 19Other sites include
Lagunas Norte, Golden Sunlight, and Morila (40%) and excludes
Pierina which is mining incidental ounces as it enters closure. Due
to the planned ramp down of operations, we will cease to include
production or non-GAAP cost metrics for Golden Sunlight or
Morila after the second quarter and Lagunas Norte after the end of
the third quarter.
Endnote 20Total cash costs and
all-in sustaining costs per ounce include the impact of hedges
and/or costs allocated to non-operating sites.
Endnote 21Operating unit
guidance ranges reflect expectations at each individual operating
unit, and may not add up to the company-wide guidance range total.
Guidance ranges exclude Pierina which is mining incidental ounces
as it enters closure.
Endnote 22Includes corporate
administration costs.
Endnote 23Reflects impact on
the remaining six months of 2019.
Endnote 24Due to our hedging
activities, which are reflected in these sensitivities, we are
partially protected against changes in these factors.
Financial and Operating Highlights
|
For the three months ended |
|
For the six months ended |
|
|
6/30/19 |
3/31/19 |
% Change |
6/30/18 |
% Change |
6/30/19 |
6/30/18 |
% Change |
|
Financial
Results ($ millions) |
|
|
|
|
|
|
|
|
|
Revenues |
2,063 |
2,093 |
(1) |
% |
1,712 |
21 |
% |
4,156 |
3,502 |
19 |
% |
|
Cost of sales |
1,545 |
1,490 |
4 |
% |
1,176 |
31 |
% |
3,035 |
2,328 |
30 |
% |
|
Net earnings (loss)a |
194 |
111 |
75 |
% |
(94) |
306 |
% |
305 |
64 |
377 |
% |
|
Adjusted net earningsb |
154 |
184 |
(16) |
% |
81 |
90 |
% |
338 |
251 |
35 |
% |
|
Adjusted EBITDAb |
972 |
1,002 |
(3) |
% |
679 |
43 |
% |
1,974 |
1,499 |
32 |
% |
|
Total capital expenditures -
sustainingc |
267 |
253 |
6 |
% |
212 |
26 |
% |
520 |
445 |
17 |
% |
|
Total project capital
expendituresc |
108 |
120 |
(10) |
% |
101 |
7 |
% |
228 |
194 |
18 |
% |
|
Total consolidated capital expendituresc,d |
379 |
374 |
1 |
% |
313 |
21 |
% |
753 |
639 |
18 |
% |
|
Net cash provided by operating activities |
434 |
520 |
(17) |
% |
141 |
208 |
% |
954 |
648 |
47 |
% |
|
Free cash flowb |
55 |
146 |
(62) |
% |
(172) |
132 |
% |
201 |
9 |
2,133 |
% |
|
Per share data (dollars) |
|
|
|
|
|
|
|
|
|
Net earnings (loss) (basic and diluted) |
0.11 |
0.06 |
83 |
% |
(0.08) |
238 |
% |
0.17 |
0.05 |
240 |
% |
|
Adjusted net earnings (basic)b |
0.09 |
0.11 |
(18) |
% |
0.07 |
29 |
% |
0.19 |
0.22 |
(14) |
% |
|
Weighted average
diluted common shares (millions of shares) |
1,752 |
1,746 |
0 |
% |
1,167 |
50 |
% |
1,749 |
1,167 |
50 |
% |
|
Operating Results |
|
|
|
|
|
|
|
|
|
Gold production (thousands of
ounces)e |
1,353 |
1,367 |
(1) |
% |
1,067 |
27 |
% |
2,720 |
2,116 |
29 |
% |
|
Gold sold (thousands of
ounces)e |
1,372 |
1,365 |
1 |
% |
1,037 |
32 |
% |
2,737 |
2,108 |
30 |
% |
|
Per ounce data |
|
|
|
|
|
|
|
|
|
Market gold price ($/oz) |
1,309 |
1,304 |
0 |
% |
1,306 |
0 |
% |
1,307 |
1,318 |
(1) |
% |
|
Realized gold priceb,e ($/oz) |
1,317 |
1,307 |
1 |
% |
1,313 |
0 |
% |
1,312 |
1,323 |
(1) |
% |
|
Cost of sales (Barrick’s share)e,f ($/oz) |
964 |
947 |
2 |
% |
882 |
9 |
% |
956 |
865 |
11 |
% |
|
Total cash costsb,e
($/oz) |
651 |
631 |
3 |
% |
605 |
8 |
% |
641 |
589 |
9 |
% |
|
All-in sustaining costsb,e ($/oz) |
869 |
825 |
5 |
% |
856 |
2 |
% |
842 |
830 |
1 |
% |
|
Copper production (millions of
pounds)g |
97 |
106 |
(8) |
% |
83 |
17 |
% |
203 |
168 |
21 |
% |
|
Copper sold (millions of
pounds)g |
96 |
103 |
(7) |
% |
74 |
30 |
% |
199 |
159 |
25 |
% |
|
Per pound data |
|
|
|
|
|
|
|
|
|
Market copper price ($/lb) |
2.77 |
2.82 |
(2) |
% |
3.12 |
(11) |
% |
2.80 |
3.14 |
(11) |
% |
|
Realized copper priceb,g ($/lb) |
2.62 |
3.07 |
(15) |
% |
3.11 |
(16) |
% |
2.85 |
3.04 |
(6) |
% |
|
Cost of sales (Barrick’s share)g,h ($/lb) |
2.04 |
2.21 |
(8) |
% |
2.45 |
(17) |
% |
2.13 |
2.25 |
(5) |
% |
|
C1 cash costsb,g ($/lb) |
1.59 |
1.66 |
(4) |
% |
2.10 |
(24) |
% |
1.62 |
1.98 |
(18) |
% |
|
All-in sustaining costsb,g ($/lb) |
2.28 |
2.46 |
(7) |
% |
3.04 |
(25) |
% |
2.37 |
2.81 |
(16) |
% |
|
|
As at 6/30/19 |
As at 3/31/19 |
% Change |
As at 6/30/18 |
% Change |
|
|
|
|
Financial
Position ($ millions) |
|
|
|
|
|
|
|
|
|
Debt (current and long-term) |
5,807 |
5,807 |
0 |
% |
6,392 |
(9) |
% |
|
|
|
|
Cash and equivalents |
2,153 |
2,153 |
0 |
% |
2,085 |
3 |
% |
|
|
|
|
Debt, net of cash |
3,654 |
3,654 |
0 |
% |
4,307 |
(15) |
% |
|
|
|
|
a. Net earnings (loss) represents net earnings (loss)
attributable to the equity holders of the Company.b. Adjusted
net earnings, adjusted EBITDA, free cash flow, adjusted net
earnings per share, realized gold price, all-in sustaining costs,
total cash costs, C1 cash costs and realized copper price are
non-GAAP financial performance measures with no standardized
meaning under IFRS and therefore may not be comparable to similar
measures presented by other issuers. For further information and a
detailed reconciliation of each non-GAAP measure to the most
directly comparable IFRS measure, please see pages 78 to 99 of our
second quarter MD&A.c. Amounts presented on a consolidated
cash basis. Project capital expenditures are included in our
calculation of all-in costs, but not included in our calculation of
all-in sustaining costs.d. Total consolidated capital
expenditures also includes capitalized interest.e. Includes
Acacia on a 63.9% basis, Pueblo Viejo on a 60% basis, South Arturo
on a 60% basis, and Veladero on a 50% basis, which reflects our
equity share of production and sales. Also includes
Loulo-Gounkoto on an 80% basis, Kibali on a 45% basis, Tongon on an
89.7% basis and Morila on a 40% basis, which reflects our equity
share of production and sales, commencing January 1, 2019, the
effective date of the merger with Randgold.f. Cost of sales
per ounce (Barrick’s share) is calculated as cost of sales - gold
on an attributable basis (excluding Pierina) divided by gold ounces
sold.g. Amounts reflect production and sales from Jabal Sayid
and Zaldívar on a 50% basis, which reflects our equity share of
production, and Lumwana.h. Cost of sales per pound (Barrick’s
share) is calculated as cost of sales - copper plus our equity
share of cost of sales attributable to Zaldívar and Jabal Sayid
divided by copper pounds sold.
Consolidated Statements of Income
Barrick
Gold Corporation(in millions of United States dollars, except per
share data) (Unaudited) |
Three months ended June 30, |
Six months ended June 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenue (notes 5 and 6) |
$2,063 |
$1,712 |
$4,156 |
$3,502 |
Costs and expenses
(income) |
|
|
|
|
Cost of sales (notes 5 and
7) |
|
1,545 |
|
1,176 |
|
3,035 |
|
2,328 |
General and administrative
expenses |
|
59 |
|
93 |
|
113 |
|
141 |
Exploration, evaluation and
project expenses |
|
98 |
|
97 |
|
172 |
|
170 |
Impairment charges (notes 9B and
13) |
|
12 |
|
59 |
|
15 |
|
61 |
(Gain) loss on currency
translation |
|
(6) |
|
75 |
|
16 |
|
90 |
Closed mine rehabilitation |
|
16 |
|
9 |
|
41 |
|
— |
Income from equity investees
(note 12) |
|
(50) |
|
(10) |
|
(78) |
|
(26) |
Gain on non-hedge
derivatives |
|
— |
|
(1) |
|
(1) |
|
(3) |
Other expense (note 9A) |
|
7 |
|
38 |
|
34 |
|
39 |
Income before finance
costs and income taxes |
$382 |
$176 |
$809 |
$702 |
Finance costs, net |
|
(118) |
|
(136) |
|
(238) |
|
(269) |
Income before income
taxes |
$264 |
$40 |
$571 |
$433 |
Income tax expense (note 10) |
|
(41) |
|
(116) |
|
(208) |
|
(317) |
Net income (loss) |
$223 |
($76) |
$363 |
$116 |
Attributable
to: |
|
|
|
|
Equity holders of Barrick Gold
Corporation |
$194 |
($94) |
$305 |
$64 |
Non-controlling interests |
$29 |
$18 |
$58 |
$52 |
|
|
|
|
|
Earnings (loss) per
share data attributable to the equity holders of Barrick Gold
Corporation (note 8) |
|
|
|
|
Net income (loss) |
|
|
|
|
Basic |
$0.11 |
($0.08) |
$0.17 |
$0.05 |
Diluted |
$0.11 |
($0.08) |
$0.17 |
$0.05 |
The notes to these unaudited condensed interim financial
statements, which are contained in the Second Quarter Report 2019
available on our website are an integral part of these consolidated
financial statements.
Consolidated Statements of Comprehensive
Income
Barrick
Gold Corporation(in millions of United States dollars)
(Unaudited) |
Three months ended June 30, |
Six months ended June 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net income (loss) |
$223 |
($76) |
$363 |
$116 |
Other comprehensive (loss) income, net of
taxes |
|
|
|
|
Items that may be
reclassified subsequently to profit or loss: |
|
|
|
|
Unrealized gains (losses) on derivatives designated as cash
flow hedges, net of tax $nil, ($3), $nil and ($6) |
|
— |
|
4 |
|
— |
|
10 |
Currency translation adjustments, net of tax $nil, $nil, $nil
and $nil |
|
(1) |
|
2 |
|
(3) |
|
2 |
Items that will not be
reclassified to profit or loss: |
|
|
|
|
Actuarial gain (loss) on post employment benefit obligations,
net of tax $nil, $nil, $nil and $nil |
|
— |
|
1 |
|
— |
|
1 |
Net unrealized change on equity investments, net of tax $nil,
$nil, $nil and $nil |
|
11 |
|
(4) |
|
8 |
|
(8) |
Net realized change on
equity investments, net of tax $nil, $nil, $nil and $nil |
|
— |
|
— |
|
(1) |
|
— |
Total other
comprehensive income |
|
10 |
|
3 |
|
4 |
|
5 |
Total
comprehensive income (loss) |
$233 |
($73) |
$367 |
$121 |
Attributable to: |
|
|
|
|
Equity holders of Barrick Gold Corporation |
$204 |
($91) |
$309 |
$69 |
Non-controlling interests |
$29 |
$18 |
$58 |
$52 |
The notes to these unaudited condensed interim financial
statements, which are contained in the Second Quarter Report 2019
available on our website are an integral part of these consolidated
financial statements.
Consolidated Statements of Cash Flow
Barrick Gold Corporation (in millions of United States
dollars) (Unaudited) |
Three months ended June 30, |
Six months ended June 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
OPERATING
ACTIVITIES |
|
|
|
|
Net income (loss) |
$223 |
($76) |
$363 |
$116 |
Adjustments for the following
items: |
|
|
|
|
Depreciation |
|
466 |
|
328 |
|
901 |
|
653 |
Finance costs |
|
125 |
|
139 |
|
252 |
|
277 |
Impairment charges (notes 9B and 13) |
|
12 |
|
59 |
|
15 |
|
61 |
Income tax expense (note 10) |
|
41 |
|
116 |
|
208 |
|
317 |
Gain on sale of non-current assets |
|
(12) |
|
(2) |
|
(12) |
|
(48) |
(Gain) loss on currency translation |
|
(6) |
|
75 |
|
16 |
|
90 |
Change in working capital
(note 11) |
|
(86) |
|
(81) |
|
(330) |
|
(233) |
Other
operating activities (note 11) |
|
42 |
|
(56) |
|
14 |
|
(144) |
Operating cash flows before
interest and income taxes |
|
805 |
|
502 |
|
1,427 |
|
1,089 |
Interest paid |
|
(137) |
|
(155) |
|
(165) |
|
(183) |
Income
taxes paid |
|
(234) |
|
(206) |
|
(308) |
|
(258) |
Net cash provided by operating activities |
|
434 |
|
141 |
|
954 |
|
648 |
INVESTING
ACTIVITIES |
|
|
|
|
Property, plant and
equipment |
|
|
|
|
Capital expenditures (note 5) |
|
(379) |
|
(313) |
|
(753) |
|
(639) |
Sales proceeds |
|
15 |
|
5 |
|
18 |
|
52 |
Investment purchases |
|
(4) |
|
(38) |
|
(7) |
|
(39) |
Cash acquired in merger |
|
— |
|
— |
|
751 |
|
— |
Other
investing activities (note 11) |
|
17 |
|
(1) |
|
62 |
|
(5) |
Net cash provided by (used in) investing
activities |
|
(351) |
|
(347) |
|
71 |
|
(631) |
FINANCING
ACTIVITIES |
|
|
|
|
Lease repayments |
|
(6) |
|
— |
|
(18) |
|
— |
Debt repayments |
|
— |
|
(8) |
|
(16) |
|
(31) |
Dividends |
|
(61) |
|
(32) |
|
(394) |
|
(63) |
Funding from non-controlling
interests |
|
8 |
|
4 |
|
14 |
|
12 |
Disbursements to
non-controlling interests |
|
(23) |
|
(56) |
|
(28) |
|
(82) |
Net cash used in financing activities |
|
(82) |
|
(92) |
|
(442) |
|
(164) |
Effect of exchange rate changes on cash and
equivalents |
|
(1) |
|
(1) |
|
(1) |
|
(2) |
Net increase (decrease) in
cash and equivalents |
|
— |
|
(299) |
|
582 |
|
(149) |
Cash and equivalents at the beginning of
period |
|
2,153 |
|
2,384 |
|
1,571 |
|
2,234 |
Cash and equivalents at the end of period |
$ |
2,153 |
$2,085 |
$2,153 |
$2,085 |
The notes to these unaudited condensed interim financial
statements, which are contained in the Second Quarter Report 2019
available on our website are an integral part of these consolidated
financial statements.
Consolidated Balance Sheets
Barrick Gold Corporation (in millions of United States
dollars) (Unaudited) |
As at June 30, |
As at December 31, |
|
|
2019 |
|
2018 |
ASSETS |
|
|
Current assets |
|
|
Cash and equivalents (note 14A) |
$2,153 |
$1,571 |
Accounts receivable |
|
427 |
|
248 |
Inventories |
|
1,930 |
|
1,852 |
Other current assets |
|
333 |
|
307 |
Total current assets |
$4,843 |
$3,978 |
Non-current assets |
|
|
Equity in investees (note 12) |
|
4,459 |
|
1,234 |
Property, plant and equipment |
|
16,890 |
|
12,826 |
Goodwill |
|
2,837 |
|
1,176 |
Intangible assets |
|
227 |
|
227 |
Deferred income tax assets |
|
252 |
|
259 |
Non-current portion of inventory |
|
1,830 |
|
1,696 |
Other assets |
|
1,264 |
|
1,235 |
Total assets |
$32,602 |
$22,631 |
LIABILITIES AND
EQUITY |
|
|
Current liabilities |
|
|
Accounts payable |
$1,064 |
$1,101 |
Debt (note 14B) |
|
303 |
|
43 |
Current income tax liabilities |
|
133 |
|
203 |
Other current liabilities |
|
282 |
|
321 |
Total current liabilities |
$1,782 |
$1,668 |
Non-current liabilities |
|
|
Debt (note 14B) |
|
5,504 |
|
5,695 |
Provisions |
|
3,179 |
|
2,904 |
Deferred income tax liabilities |
|
1,941 |
|
1,236 |
Other liabilities |
|
1,729 |
|
1,743 |
Total
liabilities |
$14,135 |
$13,246 |
Equity |
|
|
Capital stock (note 16) |
$28,801 |
$20,883 |
Deficit |
|
(13,227) |
|
(13,453) |
Accumulated other comprehensive loss |
|
(154) |
|
(158) |
Other |
|
326 |
|
321 |
Total equity
attributable to Barrick Gold Corporation shareholders |
$15,746 |
$7,593 |
Non-controlling interests |
|
2,721 |
|
1,792 |
Total
equity |
$18,467 |
$9,385 |
Contingencies and
commitments (notes 5 and 17) |
|
|
Total
liabilities and equity |
$32,602 |
$22,631 |
The notes to these unaudited condensed interim financial
statements, which are contained in the Second Quarter Report 2019
available on our website are an integral part of these consolidated
financial statements.
Consolidated Statements of Changes in
Equity
Barrick
Gold Corporation |
|
Attributable to equity holders of the company |
|
|
(in
millions of United States dollars) (Unaudited) |
Common Shares (in thousands) |
Capital stock |
Retained deficit |
Accumulated other comprehensive income (loss)1 |
Other2 |
Total equity attributable to shareholders |
Non-controlling interests |
Total equity |
At January 1,
2019 |
1,167,847 |
$20,883 |
($13,453) |
($158) |
$321 |
|
$7,593 |
$1,792 |
$9,385 |
Net income |
— |
|
— |
|
305 |
|
— |
|
— |
|
|
305 |
|
58 |
|
363 |
Total other comprehensive income |
— |
|
— |
|
— |
|
4 |
|
— |
|
|
4 |
|
— |
|
4 |
Total comprehensive income |
— |
|
— |
|
305 |
|
4 |
|
— |
|
|
309 |
|
58 |
|
367 |
Transactions with owners |
|
|
|
|
|
|
|
|
Dividends |
— |
|
— |
|
(64) |
|
— |
|
— |
|
|
(64) |
|
— |
|
(64) |
Merger with Randgold Resources Limited |
583,669 |
|
7,903 |
|
— |
|
— |
|
— |
|
|
7,903 |
|
885 |
|
8,788 |
Issued on exercise of stock options |
25 |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
Funding from non-controlling interests |
— |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
14 |
|
14 |
Other decrease in non-controlling interest |
— |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
(28) |
|
(28) |
Dividend reinvestment plan (note 16) |
1,128 |
|
15 |
|
(15) |
|
— |
|
— |
|
|
— |
|
— |
|
— |
Share-based payments |
— |
|
— |
|
— |
|
— |
|
5 |
|
|
5 |
|
— |
|
5 |
Total transactions with owners |
584,822 |
|
7,918 |
|
(79) |
|
— |
|
5 |
|
|
7,844 |
|
871 |
|
8,715 |
At June 30,
2019 |
1,752,669 |
$28,801 |
($13,227) |
($154) |
$326 |
|
$15,746 |
$2,721 |
$18,467 |
|
|
|
|
|
|
|
|
|
At December 31, 2017 |
1,166,577 |
$20,893 |
($11,759) |
($169) |
$321 |
|
$9,286 |
$1,781 |
$11,067 |
Impact of adopting IFRS 15 on January 1, 2018 |
— |
|
— |
|
64 |
|
— |
|
— |
|
|
64 |
|
— |
|
64 |
At January 1, 2018 (restated) |
1,166,577 |
$20,893 |
($11,695) |
($169) |
$321 |
|
$9,350 |
$1,781 |
$11,131 |
Net income |
— |
|
— |
|
64 |
|
— |
|
— |
|
|
64 |
|
52 |
|
116 |
Total other comprehensive income |
— |
|
— |
|
— |
|
5 |
|
— |
|
|
5 |
|
— |
|
5 |
Total comprehensive income |
— |
|
— |
|
64 |
|
5 |
|
— |
|
|
69 |
|
52 |
|
121 |
Transactions with owners |
|
|
|
|
|
|
|
|
Dividends |
— |
|
— |
|
(63) |
|
— |
|
— |
|
|
(63) |
|
— |
|
(63) |
Issued on exercise of stock options |
11 |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
Funding from non-controlling interests |
— |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
12 |
|
12 |
Other decrease in non-controlling interests |
— |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
(95) |
|
(95) |
Dividend reinvestment plan |
571 |
|
7 |
|
(7) |
|
— |
|
— |
|
|
— |
|
— |
|
— |
Total transactions with owners |
582 |
|
7 |
|
(70) |
|
— |
|
— |
|
|
(63) |
|
(83) |
|
(146) |
At June 30,
2018 |
1,167,159 |
$20,900 |
($11,701) |
($164) |
$321 |
|
$9,356 |
$1,750 |
$11,106 |
1 Includes cumulative translation losses at June 30,
2019: $85 million (June 30, 2018: $72
million).2 Includes additional paid-in capital as at
June 30, 2019: $283 million (December 31, 2018:
$283 million; June 30, 2018: $283 million) and
convertible borrowings - equity component as at June 30, 2019:
$38 million (December 31, 2018: $38 million;
June 30, 2018: $38 million).The notes to these unaudited
condensed interim financial statements, which are contained in the
Second Quarter Report 2019 available on our website are an integral
part of these consolidated financial statements.
Corporate Office
Barrick Gold Corporation161 Bay
Street, Suite 3700Toronto, Ontario M5J 2S1Canada
Telephone: +1 416 861-9911Email:
investor@barrick.comWebsite: www.barrick.com
Shares Listed
GOLD The New York Stock
ExchangeABX The Toronto
Stock Exchange
Transfer Agents and Registrars
AST Trust Company (Canada)P.O.
Box 700, Postal Station BMontreal, Quebec H3B
3K3orAmerican Stock Transfer & Trust Company,
LLC6201 – 15 AvenueBrooklyn, New York 11219
Telephone: 1-800-387-0825Fax:
1-888-249-6189Email: inquiries@astfinancial.comWebsite:
www.astfinancial.com
Enquiries
President and Chief Executive OfficerMark
Bristow+1 647 205 7694+44 788 071 1386
Graham ShuttleworthSenior Executive Vice-President and
Chief Financial Officer+1 647 262 2095+44 779 771 1338+44 1534 735
333
Investor and Media RelationsKathy du Plessis+44
20 7557 7738Email: barrick@dpapr.com
Cautionary Statement on Forward-Looking
Information
Certain information contained or incorporated by
reference in this press release, including any information as to
our strategy, projects, plans or future financial or operating
performance, constitutes “forward-looking statements”. All
statements, other than statements of historical fact, are
forward-looking statements. The words “believe”, “expect”,
“anticipate”, “target”, “plan”, “objective”, “assume”, “intend”,
“project”, “pursue”, “goal”, “continue”, “budget”, “estimate”,
“potential”, “may”, “will”, “can”, “could”, “would”, “should” and
similar expressions identify forward-looking statements. In
particular, this press release contains forward-looking statements
including, without limitation, with respect to: Barrick’s
forward-looking production guidance; estimates of future cost of
sales per ounce for gold and per pound for copper, total cash costs
per ounce and C1 cash costs per pound, and all-in-sustaining costs
per ounce/pound; cash flow forecasts; projected capital, operating
and exploration expenditures; mine life and production rates;
estimated timing for construction of, and production from, new
projects; potential benefits of the Nevada joint venture, including
potential synergies, opportunities for efficiencies and
cost-effectiveness, and the impact on mine lives, employment and
local communities; extension to the life of the Cortez mine as a
result of the Deep South Project; Barrick’s visions for the
integration of automation in its operations; the benefits of the
Government-endorsed reconciliation agreement between the Tongon
mine, the employees and the community; future investments in
community projects, permitting strategy, the availability of power
to the Tongon mine and the potential for future mine life
extensions, additions to reserves, and exploration success;
Barrick’s plans to invest in Latin American exploration, and
ability to create partnerships with host governments; the expansion
of Pueblo Viejo and impact of such expansion on annual production,
and Barrick’s plans for its other Latin American assets;
value-creating projects in the Democratic Republic of Congo,
including infrastructure and agribusiness projects; engagement with
the government of the Democratic Republic of Congo in relation to a
new mining code introduced last year, and future contributions to
the economy of the Democratic Republic of Congo; the future for
Porgera, including opportunities to maintain and increase
production and increase the life of mine, while continuing to
reduce costs, and continued benefits to the country and community;
discussions to reach agreement with the PNG government regarding an
extension of Porgera’s special mining lease and the terms of any
such agreement; our pipeline of high confidence projects at or near
existing operations, including exploration projects and potential
brownfield developments; potential for the Goldrush-Fourmile
project and Porgera to become a Tier One gold asset; potential
mineralization and metal or mineral recoveries; our ability to
convert resources into reserves; expectations regarding timing of
completion of the acquisition of the minority interest in Acacia
and post-closing integration activities; potential future
transactions, including with respect to KCGM; and expectations
regarding future price assumptions, financial performance and other
outlook or guidance.
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; 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; approval of the Recommended Final Offer by
minority shareholders of Acacia, and timing and completion of such
transaction; timing of receipt of, or failure to comply with,
necessary permits and approvals, including with respect to Barrick
Niugini Limited’s application for an extension to the Porgera
mine’s special mining lease; the benefits expected from recent
transactions being realized, including Nevada Gold Mines;
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 Barrick's 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; adverse changes
in our credit ratings; 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; risks associated with illegal
and artisanal mining; the risks of operating in jurisdictions where
infectious diseases present major health care issues; disruption of
supply routes which may cause delays in construction and mining
activities; 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. We disclaim 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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