Barrick posts first quarter results; Buzwagi project to pour gold shortly

Barrick Gold (ABX-T, ABX-N) is set to pour the first gold at its Buzwagi project in northwestern Tanzania in the second quarter of 2009.

“This is the sixth mine Barrick has built in the last six years that has come in on time,” Barrick’s new president and chief executive, Aaron Regent, declared in a statement.

Barrick has identified proven and probable reserves of 3.3 million ounces of gold and claims Buzwagi, about 120 km south of the city of Mwanza, a southern port of Lake Victoria, will be Tanzania’s second-largest mining operation and its largest single open-pit.

Buzwagi is expected to contribute about 190,000-210,000 ounces of gold this year to Barrick’s war chest at total cash costs of about US$320-$335 per oz.

Buzwagi’s gold will help drive up Barrick’s full-year 2009 production to 7.2-7.6 million oz. gold at total cash costs of US$450-$475 per oz., the company said in a press release announcing its first-quarter results.

While Barrick experienced lower production and higher costs in the first quarter due to planned mine sequencing, the gold major still managed to earn US$371 million or 42¢ a share, down from US$514 million or 59¢ per share in the year-earlier quarter.

Quarterly gold production came in at 1.76 million ounces with total cash costs of US$484 per oz. (If the company’s oil and foreign exchange hedges were not taken into account, cash costs would have been US$45 per oz. lower.)

Operating cash flow dropped to US$349 million compared with US$718 million a year ago, while Barrick issued US$750 million in debt securities.

At the end of March, Barrick enjoyed a cash balance of US$2.1 billion, US$1.5 billion in undrawn credit, and net debt of US$2.9 billion with scheduled payments of less than US$300 million over the next four years.

Looking ahead, Barrick expects its Cortez Hills project in Nevada will start in the first quarter of 2010. Once it moves into production, it is expected to increase Barrick’s full-year 2010 production to about 7.7-8.1 million oz. gold, Barrick says.

Barrick describes Cortez Hills as “another one million ounce producer for Barrick at total cash costs of US$350-$400 per oz. in its first full five years.”

The company believes its Pueblo Viejo project in the Dominican Republic will launch initial production in the fourth quarter of 2011.

Barrick gets 60% of Pueblo Viejo’s annual gold production and in the first full five years expects its share will amount to 600,000-650,000 oz. per year at total cash costs of about US$275-$300 per oz. Pueblo Viejo is anticipated to have a mine life of more than 25 years.

At presstime in Toronto Barrick was trading at C$35.69 per share. Over the last year it has traded in a C$22-$52.47 per share band.

The company has 873.1 million shares outstanding.