Barrick Gold . A Year of Delivery and Development as Barrick Meets Targets, Advances Growth Projects

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Overig advies 18/02/2021 13:36
- All amounts expressed in US dollars
TORONTO — Barrick Gold Corporation (NYSE:GOLD)(TSX:ABX) reported today that it had met its production targets for 2020, thanks to a consistent operating performance across the group that demonstrated management’s ability to manage the impact of the Covid-19 pandemic and other challenges. While cost of sales per ounce was impacted, total cash costs1 and AISC per ounce1 were contained within guidance despite higher royalty expenses from the higher gold price environment.

At the same time, Barrick has continued to progress major capital projects, including the Pueblo Viejo plant expansion, the development of the underground mine at Gounkoto, the transition to a new heap leach phase at Veladero and the re-establishment of the Bulyanhulu mine.

Key Performance Indicators
Barrick delivers on 2020 gold production guidance
Consistent operating performance across all quarters of the year demonstrated Barrick’s ability to manage impact of Covid-19
Higher gold and copper prices delivered annual operating cash flow of $5.4 billion and record annual free cash flow2 of $3.4 billion
Gold total cash costs1 and AISC1 within guidance in spite of higher royalty costs
Strong performance from Barrick operated copper assets with costs at low end, or below, the guidance range
Zero net debt achieved and credit rating upgraded
Net earnings per share of $1.31 for 2020; adjusted net earnings per share3 of $1.15 for the year (up 125% on prior year)
Pueblo Viejo plant expansion approved and work commences
Attributable group reserves partially replaced net of depletion, excluding Massawa disposition, while resources grow as focus on geology models pays dividends
Continued portfolio rationalization supports further industry consolidation
Exploration results confirm significant orebody extensions at most operations
High-grade resource continues to grow at Fourmile as attention turns to accelerating the project into the mine plan
Bedded down exploration focus and developing significant exploration opportunities across the portfolio; new frontiers opening in all regions
Significant safety improvement in 2020: 38% decrease in LTIFR9 and 29% decrease in TRIFR10 year-on-year
Zero Class 1 Environmental Incidents11 for Q4; continued to exceed 75% water reuse and recycling target for 2020
Barrick declares $0.09 quarterly dividend per share plus proposes $750 million capital return
Financial and Operating Highlights
Financial Results Q4 2020 Q3 2020 2020 2019
Realized gold price4,5
($ per ounce) 1,871 1,926 1,778 1,396
Net earnings
($ millions) 685 882 2,324 3,969
Adjusted net earnings3
($ millions) 616 726 2,042 902
Net cash provided by operating activities ($ millions) 1,638 1,859 5,417 2,833
Free cash flow2
($ millions) 1,092 1,311 3,363 1,132
Net earnings per share
($) 0.39 0.50 1.31 2.26
Adjusted net earnings per share3 ($) 0.35 0.41 1.15 0.51
Attributable capital expenditures
($ millions) 445 436 1,651 1,512
Debt, net of cash
($ millions) (33) 417 (33) 2,222
Operating Results Q4 2020 Q3 2020 2020 2019

(000s of ounces) 1,206 1,155 4,760 5,465
Cost of sales (Barrick's share)5,6
($ per ounce) 1,065 1,065 1,056 1,005
Total cash costs1,5
($ per ounce) 692 696 699 671
All-in sustaining costs1,5
($ per ounce) 929 966 967 894

(millions of pounds) 119 103 457 432
Cost of sales (Barrick's share)6,7
($ per pound) 2.06 1.97 2.02 2.14
C1 cash costs7,8
($ per pound) 1.61 1.45 1.54 1.69
All-in sustaining costs7,8
($ per pound) 2.42 2.31 2.23 2.52

Higher gold and copper prices drove annual operating cash flow up 91% to $5.4 billion and annual free cash flow2 to a new record high of $3.4 billion. Net earnings per share were $1.31 for 2020 and adjusted net earnings per share3 of $1.15 was up 125% on the previous year. The company ended the year with zero debt, net of cash, down from a peak of $13.4 billion in 2013, and with an improved credit rating of Baa1 from Moody’s, among the best in the gold sector.

Barrick declared an unchanged quarterly dividend of 9 cents per share and announced that it would propose a return of capital distribution of approximately 42 cents per share based on the issued and outstanding shares as of December 31, 2020. The total distribution of $750 million is derived from the $1.5 billion in proceeds from the company’s sale of non-core assets since 2019, and will be effected in three equal tranches to shareholders of record on dates to be determined in May, August and November this year. This return of capital is subject to shareholder approval at the Annual and Special Meeting on May 4, 2021.

Senior executive vice-president and chief financial officer Graham Shuttleworth said this return of capital, which will provide shareholders with a significantly enhanced return in 2021, was in line with Barrick’s strategy of returning surplus funds to shareholders.

President and chief executive Mark Bristow said despite 2020’s unprecedented difficult operating conditions — which in addition to the pandemic had included a coup in Mali, the financial meltdown in Argentina and the Papua New Guinea government’s flirtation with resource nationalism — the company made further progress towards delivering on its environmental, social and governance (ESG) commitments, and expected to improve on its rating in last year’s industry-first scorecard, published in its sustainability report.

“We have a detailed road map towards clearly defined emission reduction targets, based on climate science and operational realities. Unlike others, our plan does not rely on mine closures and production cutbacks. Our ultimate aim is net zero emissions with landmarked targets towards this goal, which are constantly reviewed and updated as new emissions-reduction opportunities are identified and realized. In addition, each operation has an effective plan for the continued transition to cleaner, more efficient energy sources, and our water usage performance continues to improve,” Bristow said.

“Our long-established partnership philosophy is the beating heart of our ESG strategy. It was invaluable in our management of the impact of the coronavirus on our business and our people and it also enabled us to provide much-needed support to our host communities and governments. On an everyday level, every operational site now has a fully functional community development committee to deal with local issues.”

The group’s total attributable gold resources grew in 2020, net of depletion and excluding the impact of the disposition of Massawa, as a result of the focus on high-confidence geology models following the merger with Randgold. Attributable gold reserves achieved a 76% replacement of depleted ounces, excluding Massawa, with the Africa and Middle East region once again more than replenishing their reserves.12

Bristow said that since the merger with Randgold, the company had made significant progress in improving its knowledge of the legacy Barrick orebodies and in developing Life of Mine optimizations based on updated models, operating plans and cost forecasts.

“As our understanding of the orebodies increases, the potential for resource conversion to reserves will grow, but we still have some way to go to reach the replacement levels of the Africa and Middle East region across the group,” he said.

Bristow said an in-principle agreement about the future of the Porgera mine, which has been on care and maintenance for most of the past year, was reached with the government of Papua New Guinea in October 2020 and teams from both sides continue to work on the details of a mutually acceptable settlement.

In the meantime, Porgera has been excluded from the group’s 2021 production guidance of 4.4 to 4.7 million ounces of gold but, if an agreement is reached, will be added back in once the terms and timing of the settlement have been finalized. The company is expecting per ounce costs to be similar to prior year actual results. Sustaining capital guidance includes investments previously deferred due to the Covid-19 pandemic.

Q4 and Full Year 2020 Results Presentation
President and chief executive Mark Bristow will host a virtual presentation on the results today at 11:00 EST/16:00 UTC, with an interactive webinar linked to a conference call. Participants will be able to ask questions.

Go to the webinar
US and Canada (toll-free) 1 800 319 4610
UK (toll-free) 0808 101 2791
International (toll) +1 416 915 3239

The Q4 and Full Year 2020 presentation materials will be available on Barrick’s website at and the webinar will remain on the website for later viewing.

Barrick Proposes Return of Capital Distribution and Declares Dividend
Barrick today announced it intends to propose to shareholders a return of capital distribution of approximately $0.42 per share13. Barrick also announced that its Board of Directors has declared a dividend for the fourth quarter of 2020 of $0.09 per share, payable on March 15, 2021, to shareholders of record at the close of business on March 1, 202114.

The return of capital will be proposed to shareholders at Barrick’s Annual and Special Meeting on May 4, 2021. This distribution is derived from a portion of the proceeds from the divestiture of Kalgoorlie Consolidated Gold Mines in November 2019 and from other recent dispositions made by Barrick and its affiliates. It is proposed that the total distribution of approximately $750 million will be effected in three equal tranches to shareholders of record on dates to be determined in May, August and November 2021.

Senior executive vice-president and chief financial officer Graham Shuttleworth said that the return of capital distribution demonstrates Barrick’s commitment to return surplus funds to shareholders as outlined in the strategy announced at the time of the Randgold merger in September 2018. Since that time, the quarterly dividend has tripled, and this capital distribution further increases returns to shareholders.

“The Board believes that the return of capital distribution is the most efficient way to return these surplus funds to shareholders. Based on the current number of outstanding shares, this distribution represents approximately 14 cents per share13 for each tranche, or approximately 42 cents per share13 in total. In addition to the current quarterly dividend of 9 cents per share14, this distribution will provide shareholders with a significantly enhanced return in 2021,” said Shuttleworth.

The Board continues to review further returns to shareholders, which will be balanced and evaluated equally across other capital uses, including disciplined growth and debt management.

Barrick Digital Moves Forward With Key Initiatives
With the implementation of SAP S4 HANA at Nevada Gold Mines in 2020, Barrick laid one of the key foundations for its updated digital roadmap. As the remaining mines and regions bring SAP online in 2021, a major portion of the data used for operational and financial analysis will become standardized globally.

Having successfully implemented the financial consolidation process into OneStream during Q4, the next building block is a concurrent roll-out of a more agile financial planning system, also within the new OneStream application. The full integration of these two major platforms (SAP and OneStream) will enable much quicker insight into the group’s key cost drivers and enormously increase the potential for efficiency analysis, benchmarking and other value-added reporting.

Barrick’s Global Data Platform (GDP) is at the core of our digital strategy and drives the way in which data moves between different systems and enables improved visibility and decision making by managers.

“The Global Data Platform roadmap is built around visibility of business processes and automation of data currently collected in a more manual way,” says vice president group information technology Nico West.

“Projects have been prioritized starting with foundational work around the visibility of data, understanding and getting to grips with the complexities of disparate source systems. This allows us to work towards integration, automation and optimization using fit for purpose technologies at each step. Our investment approach to the GDP is to pick specific but varied pilot projects to demonstrate the success and value that the projects will deliver to Barrick, and grow the platform incrementally, rather than a big bang approach.”

Barrick’s approach to delivering digital innovation is to let subject matter experts from within the business functions drive the programs, as opposed to a centralized innovation office. They do this by taking responsibility for identifying opportunities, prioritizing roadmaps and providing key business sponsorship on selected projects. This has the benefit of ensuring tight ownership by the business and alignment with technology teams.

By using tried and tested technology in the Azure Cloud, which sources data from core applications, we are creating common data models that allow the business to standardize how applications integrate and share information, including daily, weekly and monthly reporting.

Building a Multi-Cultural, Multi-Genertional Workforce Aligned to a Changing World
To build a modern mining business at the top of the field, we need the best people to run our portfolio of best-in-class assets, says group human resources executive Darian Rich.

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