Barrick Reports 2016 Full Year and Fourth Quarter Results
TORONTO, ON - Barrick Gold Corporation reported annual results that exceeded the Company's key targets for the year. In 2016, our mines generated operating cash flow of $2.64 billion, and free cash flow of $1.51 billion – a record level of annual free cash flow for the Company. We reduced our cost of sales applicable to gold to $798 per ounce, and our all-in sustaining costs fell by 12 percent, to $730 per ounce. The company continued to strengthen its balance sheet, cutting total debt by $2.04 billion, or 20 percent.
In 2017, the company expects to produce 5.60-5.90 million ounces of gold, at a cost of sales applicable to gold of $780-$820 per ounce, and all-in sustaining costs3 of $720-$770 per ounce. This represents an improvement over the previous 2017 guidance of 5.0-5.5 million ounces of gold, at all-in sustaining costs3 of $740-$790 per ounce. The intention is to improve upon plans as the company advances digital transformation.
For 2017, Barrick is targeting a free cash flow breakeven gold price of $1,000 per ounce, which should ensure it can generate cash in periods of lower gold prices. For 2018, the company expects to produce 4.80-5.30 million ounces of gold, at a cost of sales applicable to gold of $790-$840 per ounce, and all-in sustaining costs of $710-$770 per ounce. Based on current asset mix and subject to potential divestments, Barrick expects to maintain annual production of at least 4.5 million ounces of gold through 2021.
Full-year net earnings were $655 million, compared to a net loss of $2.84 billion in 2015. This significant improvement in earnings was largely due to $3.9 billion of impairment charges recorded in 2015, compared to net impairment reversals of $250 million recorded in 2016. Higher earnings were also driven by higher gold and copper prices, combined with higher sales volumes, lower operating costs, and lower expenses for exploration, evaluation, and projects.
Full-year revenues were $8.56 billion, compared to $9.03 billion in 2015. Operating cash flow in 2016 was $2.64 billion, compared to $2.79 billion in 2015. Free cash flow2 for 2016 was $1.51 billion, compared to $471 million6 in 2015.
Excluding the proceeds of the Pueblo Viejo streaming transaction in 2015, operating cash flow for 2016 was $456 million higher than the prior year, despite a $355 million reduction in operating cash flow associated with the divestment of non-core assets. Strong operating cash flow was driven by higher gold prices and lower direct mining costs, as a result of lower energy and fuel costs (despite being hedged on a significant portion of our fuel consumption), combined with lower labor, consumable, and contractor costs, and improved operating efficiencies driven by Best-in-Class initiatives, as well as lower cash interest paid.
Fourth quarter net earnings were $425 million, compared to a net loss of $2.62 billion in the prior-year period. Adjusted net earnings for the fourth quarter were $255 million, compared to $91 million in the prior-year period. Fourth quarter revenues were $2.32 billion, compared to $2.24 billion in the prior-year period. Operating cash flow in the fourth quarter was $711 million, compared to $698 million in the fourth quarter of 2015. Free cash flow for the fourth quarter was $385 million, compared to $387 million in the prior year period.
Achieving and maintaining a strong balance sheet remains a top priority. In 2016, Barrick reduced total debt by $2.04 billion, slightly exceeding the $2 billion target for the year. At the end of the fourth quarter, Barrick had a consolidated cash balance of approximately $2.4 billion.
Barrick's operations delivered progressively-stronger performance over the course of 2016, with three consecutive quarters of improved all-in sustaining cost guidance and gold production at the high end of our annual production forecast. These results reflect our ongoing focus on capital discipline, and Best-in-Class improvements that are driving greater productivity and efficiency.
In 2016, Barrick’s mines produced 5.52 million ounces of gold, at a cost of sales applicable to gold of $798 per ounce. All-in sustaining costs were $730 per ounce, a reduction of 12 percent compared to 2015. Gold production in the fourth quarter was 1.52 million ounces, at a cost of sales applicable to gold of $784 per ounce, and all-in sustaining costs of $732 per ounce, compared to 1.62 million ounces at a cost of sales of $848 per ounce, and all-in sustaining costs of $733 per ounce in the prior-year period. Copper production in 2016 was 415 million pounds, at a cost of sales attribute to copper of $1.43 per pound, and all-in sustaining costs of $2.05 per pound, in line with our guidance for the year. This compares to 511 million pounds, at a cost of sales attributable to copper of $1.65 per pound, and all-in sustaining costs of $2.33 per pound in 2015.