Barrick annual production on track despite covid-19, PNG troubles

Processing facilities at the Pueblo Viejo gold mine. Image from Barrick Gold.

Barrick Gold (NYSE: GOLD, TSX: ABX) is on track to achieve annual production within its 2020 guidance range, the world’s second-biggest gold miner said on Monday.

Second-quarter results show year-to-date gold production of 2.4 million ounces, at the mid-point of its 4.6 million to 5 million ounce annual guidance.

Gold production of 1.149 million ounces in Q2 was down 15% compared to 1.353 million ounces in the same period of 2019, due to the impact of coronavirus at the Veladero mine in Argentina and dispute over Porgera gold mine in Papua New Guinea.

Barrick stopped production at Porgera and sued the government after it refused to extend the mine’s expired lease in April.

Prime Minister James Marape last week said the mine may be closed for up to three years.

“The chances of recovering the mine if it’s closed for three years is quite slim,” Barrick CEO Mark Bristow told Reuters.

The miner said it realized an average gold price of $1,725 per ounce in the quarter, a 31% jump from a year earlier.

Pueblo Viejo’s production was down 22% compared to Q1 due to a planned plant maintenance shutdown

“Our major projects, including the expansion of Pueblo Viejo, the Goldrush development and the Turquoise Ridge shaft, remain on track. The only exception was Veladero, where the heap leach and cross-border Chilean power line projects were impacted by the Argentine government’s pandemic quarantine restrictions,” said Bristow.

In North America, Nevada Gold Mines led by the Cortez mine trended towards the upper end of its guidance as the integrated structure allowed the management team to adjust ore routing through Carlin’s processing facilities in real time, while at the restructured Hemlo operations in Ontario, exploration was indicating support for extending the life of mine beyond 10 years at a production profile of around 220,000 ounces per year.

In the Africa and Middle East region, Loulo-Gounkoto and Kibali were also at the upper end of their guidance.

“The Tanzanian assets are still being resuscitated but exports of the stockpiled concentrate have resumed and the Bulyanhulu underground operation is being recommissioned,” Barrick said in the press release.

According to Bristow, North Mara and Bulyanhulu were capable of producing more than 500,000 ounces annually for at least 10 years.

In Latin America, Pueblo Viejo’s production was down 22% compared to Q1 due to a planned plant maintenance shutdown, while production and costs at Veladero were impacted by a nationwide quarantine and severe winter weather.

Dividend up

Barrick beat quarterly profit estimates, benefiting from a rise in demand for gold.

The company has hiked the quarterly dividend by 14% up to 8 cents per share. Brokerage Scotiababank told Reuters the increase “was not a surprise,” but came slightly earlier than it had expected.

Operating cash flow exceeded $1 billion for the quarter and free cash flow was $522 million. Net earnings per share was 20 cents. Adjusted net earnings per share was 23 cents, up 44% from Q1. The company debt net of cash was reduced by almost 25% to $1.4 billion from the end of Q1.

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