Barrick Gold (TSX: ABX; NYSE: ABX) and Goldcorp (TSX: G; NYSE: GG) — Canada’s top gold companies by market capitalization — have released their fourth-quarter and full-year 2016 results. Here are the highlights:
Barrick reported better-than-expected fourth-quarter and full-year earnings, helped by strong production results, higher metal prices and lower operating costs.
Adjusted earnings were US22¢ per share for the December quarter, beating analyst expectations, compared to US8¢ per share in the same period of 2015.
Adjusted 2016 profit was US$818 million, or US70¢ per share, versus US$344 million, or US30¢ per share, in 2015, when the Toronto-based miner took a US$3.9-billion impairment. Barrick recorded a US$250-million impairment reversal in 2016.
Mining vehicles at Barrick Gold and Goldcorp’s Pueblo Viejo gold mine in the Dominican Republic. Credit: Barrick Gold.
Despite full-year revenue dropping 5% to US$8.6 billion, the miner met its priority of generating free cash flow at a US$1,000 per oz. gold price.
“In 2016, not only did we achieve that objective, but we generated a record level of annual free cash flow — US$1.5 billion to be exact. In a year that saw an 8% increase in the gold price, we increased our free cash flow 221%,” Kelvin Dushnisky, Barrick’s president, said on a conference call.
Annual 2016 gold production was 5.52 million oz., including 1.52 million oz. in the fourth quarter. All-in sustaining costs (AISCs) for the year declined 12% to US$730 per ounce.
Barrick, which has nine producing gold mines around the world, forecasts 2017 production of 5.6 million to 5.9 million oz. gold, at AISCs of US$720 to US$770 per oz. gold.
After exceeding its US$2-billion total debt reduction in 2016, Barrick aims to lower its total debt another US$2.9 billion, to US$5 billion, at the end of 2018. “We’ll do that through free cash flow generation, cash-on-hand and further asset sales, joint ventures or partnerships,” Catherine Raw, Barrick’s chief financial officer, said on the call.
Given the strong 2016 financials, Barrick has bumped up its quarterly dividend by a cent to US3¢ per share.
The company — valued at $30.9 billion — ended 2016 with a US$2.4-billion consolidated cash balance. Its 2017 capital guidance is US$1.3 billion to US$1.5 billion, which includes US$185 million to US$225 million of exploration and evaluation costs.
Goldcorp performed well in the December quarter, recovering from a steep loss in the same period of 2015. Quarterly earnings were US12¢ per share compared to last year’s US$5.14-per-share loss, where the Vancouver-based miner swallowed a US$3.9-billion impairment. Analysts had expected quarterly earnings of US9¢ per share.
Full-year profit was US$162 million, or US19¢ per share, up from a net loss of US$4.2 billion, or US$5.03 per share. Revenue, however, fell 20% to US$3.5 billion, owing to lower sales.
Annual 2016 gold production was within guidance at 2.9 million oz., including 761,000 oz. delivered in the December quarter, but below 2015’s 3.5 million ounces.
AISCs dropped 24% in the fourth quarter to US$747 per oz., compared to the earlier year, due to lower production costs and the stronger U.S. dollar. Annual costs fell 4% to US$856 per ounce.
“We achieved the lower end of our AISCs’ guidance range from the progress on our cost-efficiency program of US$250 million. We have identified over 60% of the target, with 40% delivered by the end of 2016, and remain on track to achieve the full target in 2018,” David Garofalo, Goldcorp’s CEO, said on a conference call.
Goldcorp forecasts delivering 2.5 million oz. this year at AISCs of US$850 per oz., but expects to improve both production and costs in the next five years.
The company, which has seven mines and a robust project pipeline, has outlined a five-year plan to increase gold production and reserves 20% to 3 million oz. and 50 million oz., while lowering AISCs 20% to US$700 per ounce.
The miner, valued at $19.5 billion, ended 2016 with US$2.5 billion in debt and US$3.2 billion in available liquidity. It plans to spend US$100 million on exploration this year.
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