Barrick Reports Production Of 1.28 Million Ounces Of Gold In Q1
TORONTO, ON - Barrick Gold Corporation reported adjusted net earnings of $127 million for the first quarter, and a net loss of $83 million. The net loss for the quarter primarily reflects the impact of one-time foreign currency losses. First quarter free cash flow was $181 million and EBITDA was $696 million.
Production in the first quarter was 1.28 million ounces of gold at all-in sustaining costs of $706 per ounce. Cash costs were $553 per ounce. Barrick projects continue to expect full-year production of 5.0-5.5 million ounces of gold at lower all-in sustaining costs of $760-$810 per ounce.
The company has reduced our all-in sustaining cost guidance for 2016 to $760-$810 per ounce, down from the original guidance of $775-$825 per ounce, reflecting the impact of lower fuel costs, favorable foreign exchange rates, and early Best-in-Class productivity and efficiency initiatives.
The Cortez mine produced 247,000 ounces of gold in the first quarter at lower all-in sustaining costs of $469 per ounce. Lower costs primarily reflect the impact of higher sales volumes, combined with lower cash costs and lower sustaining capital spend, in part driven by progress on Best-in-Class initiatives. The company continues to anticipate 2016 production of 900,000-1,000,000 ounces of gold. All-in sustaining cost guidance for the year has been reduced to $580-$640 per ounce, down from $640-$710 per ounce.
Priority Best-in-Class initiatives in execution at Cortez for 2016 are focused on reducing open pit mining costs by improving the productivity and efficiency of open pit operations. This includes optimizing haul truck loading, and increasing haul truck availability, by compressing preventive maintenance downtime, improving handover times, and reducing unplanned maintenance. The mine is also targeting a reduction in long-duration shovel maintenance times to further improve open pit mining productivity.
Following the completion of pre feasibility studies in late 2015, Barrick has moved two significant growth projects in the Cortez district to the feasibility study phase. This includes a feasibility study for expanded underground mining in the Deep South zone, below currently permitted areas of the Cortez Hills underground mine. The project has the potential to contribute average underground production of more than 300,000 ounces per year between 2023 and 2027, at average all-in sustaining costs of approximately $580 per ounce. Initial capital costs for Deep South are estimated to be $153 million. Barrick is also advancing a feasibility study for an underground mine at the company's Goldrush deposit, located six kilometers from the Cortez Hills mine. The pre feasibility study contemplates a mine life of 21 years, with average annual production of 440,000 ounces of gold in the first full five years of operation, at all-in sustaining costs of $665 per ounce. Initial capital costs are estimated to be approximately $1 billion.
On March 28, 2016, Barrick filed an updated National Instrument 43-101 Technical Report for the Cortez property. The capital expenditure estimates included in the report were based on the life of mine plan in place at Cortez in support of our year-end 2015 mineral reserve statement. Following subsequent optimization work, we have made improvements to the Cortez mine plan that resulted in the deferral of certain capital expenditures.
The Goldstrike mine contributed 249,000 ounces in the first quarter at all-in sustaining costs of $709 per ounce. Lower all-in sustaining costs primarily reflect lower sustaining capital spend in the quarter. Optimization of contract labor also helped to reduce underground mining costs by $22 per ounce compared to the prior-year period. The company expects 2016 gold production of 975,000-1,075,000 ounces at all-in sustaining costs of $780-$850 per ounce.
Major Best-in-Class initiatives in execution include increasing tonnes mined from the underground through improvements to dispatch systems, and better paste fill utilization. Goldstrike is also targeting an increase in overall equipment availability at the thiosulfate leaching plant through maintenance and reliability improvements.
The Turquoise Ridge mine contributed 50,000 ounces of gold to Barrick in the first quarter at all-in sustaining costs of $728 per ounce. Barrick continues to expect production of 200,000-220,000 ounces in 2016 at all-in sustaining costs of $770-$850 per ounce.
Best-in-Class initiatives in execution at Turquoise Ridge include the implementation of an operator competency and training management system designed to drive greater consistency of production rates, and sustainable increases in production over time. The mine is also implementing a project to improve the efficiency and effectiveness of ground support rehabilitation activities, while maintaining a focus on safety. In addition, Turquoise Ridge is targeting maintenance improvements for mining equipment to improve availability and utilization.
Barrick has completed a feasibility study for the development of a third shaft at Turquoise Ridge, which has the potential to increase output to an average of 500,000 ounces per year (100 percent basis) at all-in sustaining costs of $625-$675 per ounce. The project would require initial capital expenditures of approximately $300-$325 million (100 percent basis) for additional underground development and shaft construction. Given the positive impact of early Best-in-Class efforts, the company has determined the optimal path forward is to defer the construction of an additional shaft in favor of a three-phase approach for the development of Turquoise Ridge. The first phase, underway now, contemplates additional improvements to sustain a throughput rate of 1,825 tonnes per day at the lowest possible cost. In support of this goal, Barrick is pursuing greater productivity through continuous mining, additional ventilation modifications, and other alternative mining methods. The second phase contemplates the installation of a new ventilation shaft. Adding a ventilation shaft would allow Turquoise Ridge to maintain throughput of 1,825 tonnes per day as mining moves deeper and further away from the existing shaft and ventilation infrastructure. The third phase, representing full implementation of the feasibility study, contemplates the conversion of the ventilation shaft into a full production shaft. Additional processing capacity would be required for production rates above 1,850 tonnes per day.
Barrick's other mines - consisting of Golden Sunlight, Hemlo, KCGM, and Porgera - contributed 208,000 ounces at all-in sustaining costs of $764 per ounce in the first quarter.