Barrick loses US$94M in Q2

Barrick Gold (TSX: ABX; NYSE: ABX) reported a net loss of US$94 million (8¢ per share) in the second quarter on revenues of US$1.71 billion.

In the same quarter a year ago, the gold major posted US$1.1 billion in net earnings on revenues of US$2.2 billion.

Operating cash flow in the three months ended June 30 came in at US$141 million, compared with US$448 million in the second quarter of 2017, while adjusted net earnings fell to US$81 million, or 7¢ per share, down from US$261 million, or 22¢ a share, in the year-earlier quarter.

Earnings and cash flow were impacted by planned maintenance at Barrick Nevada and Pueblo Viejo in the Dominican Republic, as well as lower gold sales.

The results were also affected by US$75 million in foreign currency translation losses related to the weakening Argentine peso; US$59 million in net impairment charges, mostly owing to its Kabanga project, a joint-venture with Glencore (LON: GLEN) and Acacia’s Nyanzaga project in Tanzania; and US$28 million in severance costs after staffing reductions and office closures.

Barrick produced 1.07 million oz. gold, down from 1.4 million the year before, and 83 million lb. copper, down from 104 million a year earlier.

All-in sustaining costs (AISCs) for gold came in at US$856 per oz., up from US$710 per oz. in the year-earlier period, and US$3.04 per lb. copper, up from US$2.38 per pound.

Barrick ended the second quarter with a US$2.1-billion cash balance and reported that it had trimmed debt from US$6.4 billion to US$5.8 billion.

Over the past five years, Barrick has slashed total debt by US$10 billion.

The company says it has less than US$100 million in debt due before 2020, and more than 85% of its outstanding debt matures after 2032.

Barrick confirmed that it is on track to meet full-year production guidance, with higher production and lower costs expected before year-end.

The company forecasts that it will produce 4.5 to 5 million oz. gold in 2018 at a cost of sales of US$810 to US$850 per oz., cash costs of US$540 to US$575 per oz., and AISCs of US$765 to US$815 per oz. gold.

For copper, management forecasts full-year production of 345 million to 410 million lb. copper at a cost of sales of US$2 to US$2.30 per lb., C1 cash costs of US$1.80 to US$2 per lb., and all-in sustaining costs of US$2.55 to US$2.85 per pound.

The gold major is adjusting its 2018 effective income tax rate guidance to 44–46%, up from its initial guidance of 41–43%, reflecting lower spot gold prices and sales mix.

Other second-quarter developments include the upgrading of the Fourmile exploration project — 2 km from Goldrush in Nevada — from a target to a discovery. The company also acquired a 2.5% gross revenue royalty for US$14.9 million on land next to the Hemlo property in Ontario, and completed an “enhanced strategic cooperation agreement” with China’s Shandong Gold Group Company.

Shandong is independently evaluating the potential to develop a mining project at Lama in Argentina. The study will also look at possible synergies between Lama and Barrick’s Veladero mine.