All amounts expressed in US dollars
Toronto — At the year’s halfway mark, Barrick Gold Corporation (NYSE:GOLD)(TSX:ABX) was on track to achieve annual production within its 2020 guidance range, despite the impact of the Covid-19 pandemic, the company said today.
Second quarter results show year-to-date gold production of 2.4 million ounces, at the mid-point of its 4.6 million to 5 million ounce annual guidance, driven by strong operating performances, particularly from Nevada Gold Mines (NGM) in the United States, Loulo-Gounkoto in Mali and Kibali in the Democratic Republic of Congo. Barrick’s copper portfolio continued to outperform with Lumwana in Zambia posting its best quarterly production in years.
Operating cash flow exceeded $1 billion for the quarter and free cash flow1 was $522 million. Net earnings per share was 20 cents. Adjusted net earnings per share2 was 23 cents, up 44% from Q1 and well ahead of the market consensus, debt net of cash was reduced by almost 25% to $1.4 billion from the end of Q1, and the quarterly dividend was increased by 14% to 8 cents per share. The quarterly dividend has more than doubled since the announcement of the merger between Barrick and Randgold in September 2018. The non-core asset disposal strategy, which is ongoing, has so far delivered value of $1.5 billion of which $1.25 billion was in cash.
Key Performance Indicators
•Continued solid performance positions Barrick well within annual production guidance, despite Covid-19 challenges
•Improvement in safety management following increased focus
•Strong cash generation highlights quality of assets and leverage to gold price
•Barrick continues to be vigilant in its approach to contain the impact of Covid-19
•Higher gold prices also result in higher royalty payments and costs
•Strong operating performance for copper with costs per pound at lower end of the guidance range
•Operating Cash Flow in excess of $1.0 billion and Free Cash Flow1 greater than $0.5 billion for the quarter
•Net debt down almost 25% to $1.4 billion with no significant maturities until 2033
•Net earnings per share of 20 cents; adjusted net earnings per share2 up 44% to 23 cents for the quarter
•Strong operating performance from Tier One12 assets, with Pueblo Viejo production impacted by planned maintenance shutdown
•Veladero production impacted by Argentina’s Covid-19 movement and social distancing restrictions
•30% of stockpiled concentrate shipped from Tanzania and first $100 million paid to Government
•Agreement reached in Mali to extend the Loulo convention to 2038
•Significant exploration drill results from Nevada, Dominican Republic, Mali and Tanzania
•Pueblo Viejo expansion, Goldrush development, Turquoise Ridge shaft and other key projects remain on track despite Covid-19 challenges
•Non-core asset disposal strategy delivers $1.5 billion value realization, including $1.25 billion in cash, with more to come
•Barrick increases quarterly dividend by 14% to $0.08 per share
Financial and Operating Highlights
Financial Results Q2 2020 Q1 2020 Q2 2019
Realized gold price3,4
($ per ounce) 1,725 1,589 1,317
($ millions) 357 400 194
Adjusted net earnings2
($ millions) 415 285 154
Net cash provided by operating activities
($ millions) 1,031 889 434
Free cash flow1
($ millions) 522 438 55
Net earnings per share
($) 0.20 0.22 0.11
Adjusted net earnings per share2
($) 0.23 0.16 0.09
Attributable capital expenditures6
($ millions) 402 364 361
Operating Results Q2 2020 Q1 2020 Q2 2019
(000s of ounces) 1,149 1,250 1,353
Cost of sales (Barrick's share)4,7
($ per ounce) 1,075 1,020 964
Total cash costs4,8
($ per ounce) 716 692 651
All-in sustaining costs4,8
($ per ounce) 1,031 954 869
(millions of pounds) 120 115 97
Cost of sales (Barrick's share)9,10
($ per pound) 2.08 1.96 2.04
C1 cash costs8,9
($ per pound) 1.55 1.55 1.59
All-in sustaining costs8,9
($ per pound) 2.15 2.04 2.28
President and chief executive Mark Bristow said the strong cash generation demonstrated the quality of Barrick’s assets, management’s ability to capture the full benefit of higher gold prices, effective operational execution and the group’s deft handling of the Covid-19 pandemic’s impact.
“Our flattened and decentralized management structure was a major factor in contending with Covid-19 while at the same time continuing to meet short-term targets and making significant progress towards our strategic objectives. Our major projects, including the expansion of Pueblo Viejo, the Goldrush development and the Turquoise Ridge shaft, remain on track. The only exception was Veladero, where the heap leach and cross-border Chilean power line projects were impacted by the Argentine government’s pandemic quarantine restrictions,” Bristow said.
“We also maintained our strong environmental, social and governance focus during this difficult period. The Lost Time Injury Frequency Rate decreased by 15.6% quarter on quarter, and we further reduced our carbon emissions and continued to improve our water recycling and reuse performance.”
Dealing with the operations, Bristow said in North America, NGM led by Cortez trended towards the upper end of its guidance as the integrated structure allowed the management team to adjust ore routing through Carlin’s processing facilities in real time, while at the restructured Hemlo in Canada, exploration was indicating support for extending the Life of Mine beyond 10 years at a production profile of around 220,000 ounces per year.
In the Africa and Middle East region, Loulo-Gounkoto and Kibali were also at the upper end of their guidance. The Tanzanian assets are still being resuscitated but exports of the stockpiled concentrate have resumed and the Bulyanhulu underground operation is being recommissioned. Bristow said between them, North Mara and Bulyanhulu were capable of producing more than 500,000 ounces annually for at least 10 years.13
In Latin America, Pueblo Viejo’s production was down as expected due to a planned plant maintenance shutdown, while production and costs at Veladero were impacted by a nationwide quarantine and severe winter weather.
Porgera in Papua New Guinea remains on care and maintenance while the issue of its Special Mining Lease is before the court.
Bristow said during the quarter there had been significant exploration results from Nevada, the Dominican Republic, Mali and Tanzania, and the expectation was to add significant mineral resources at most operations this year.
Q2 2020 Results Presentation - Webinar and Conference Call
President and CEO Mark Bristow will host an interactive webinar on the results today at 11:00 EDT / 15:00 UTC. The presentation will be linked to the webinar and conference call.
•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 Q2 2020 presentation materials will be available on Barrick’s website at www.barrick.com and the webinar will remain on the website for later viewing.