Barrick reaps reward from output at seven gold mines

As a result of development at the Goldstrike mine in Nevada and a production start up at the Holt- McDermott mine near Kirkland Lake, Ont., Barrick’s gold production increased to 341,000 oz in 1988 from 225,109 oz the year before.

Despite the recent reduction in gold prices Barrick’s net income for 1988 was up 53% to $37.5 million or 63 cents per share from $24.5 or 46 cents at the same time the previous year. Revenues in 1988 also rose 52% to $181.5 million for the year ended Dec 31, compared with $119.7 million during the same period in 1987.

During the fourth quarter of 1988, net income increased to $14.3 million or 24 cents per share, from $9.1 million or 16 cents per share in 1987. Fourth quarter revenues rose to $60.4 million from $36.8 million at the same time last year.

Fourth quarter gold production increased to 116,712 oz compared with 61,271 oz a year ago.

President Robert Smith attributed the company’s financial performance to strong growth in production from expanding operations and the benefits from its hedging program.

Through its gold linked financings and price hedging programs, Barrick will receive a minimum $434(US) per oz for approximately 75% of its production over the next three years. More than 90% of 1989 production has been hedged at an average minimum price of $437(US) per oz.

Deep drilling at the Goldstrike mine where Barrick will spend $365 million(US) on development over the next four years, allowed the company to increase its gold reserves to 18.5 million oz from 13 million oz at the end of 1987.

Since it acquired the Goldstrike property in 1986, reserves in all categories (at Goldstrike) have increased to 128.4 million tons grading 0.095 oz gold per ton or 12 million oz from 500,000 tons grading 0.04 oz.

To help finance the Goldstrike development program, Barrick recently arranged a 1,050,000 oz gold loan facility underwritten by Union Bank of Switzerland, Westpac Banking Corp. and The Royal Bank of Canada.

While details won’t be available until late March, Barrick will make an initial draw down of 750,000 oz in the second quarter. Of that amount, 212,000 oz will be used to repay an existing loan and 538,000 oz has been pre-sold at $418 per oz.

At year-end, Barrick had 58.9 million shares outstanding compared with 57.7 million at the close of fiscal 1987. They were trading recently on The Toronto Stock Exchange at $26.5 in a 52-week range of $28.75 and $18.25.

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