Tags: Barrick | gold | mine | costs

Barrick Posts Big Loss, Says Costs per Ounce to Rise

Thursday, 13 Feb 2014 09:49 AM

Barrick Gold Corp., the world's largest gold miner, reported a big fourth-quarter loss on Thursday as it took a hefty impairment charge, cut its gold reserve estimate by 26 percent and said costs per ounce would likely rise this year.

Toronto-based Barrick forecast its all-in sustaining costs, a measure meant to capture the effective day-to-day cost of producing an ounce of gold, would be between $920 and $980 per ounce in 2014, up from $915 in 2013.

It also slashed estimated gold reserves to 104.1 million ounces from 140.2 million ounces a year earlier. About half the decline came because it used a lower gold price assumption of $1,100 an ounce, down from $1,500.

Reserves are the amount of gold it is economically feasible to mine. Gold miners typically calculate them at the beginning of each year, and Barrick and many of its peers had been expected to lower their estimates with fourth quarter results, following years of increases.

Gold dropped 28 percent in 2013, to just above $1,200 at year-end. When prices fall, reserves typically drop, because some lower-quality ore can no longer be profitably mined, but how much depends on the deposit, and price and other assumptions.

In total, Barrick took $11.54 billion in impairment charges in 2013, linked in large part to its troubled Pascua-Lama project in the Andes as well as the gold price, following $4.4 billion in charges through 2012.

Gold miners have announced billions in writedowns over the last two years, on pricey acquisitions made during boom times and because of the decline in the price of gold.

Barrick said its net loss had narrowed to $2.83 billion, or $2.61 a share, from $3.01 billion, or $3.01 a share, a year earlier, when it also took a large impairment charge.

Excluding the charges and other items, earnings dropped to $410 million, or 37 cents a share, from $1.16 billion, or $1.16 a share, a year earlier. Revenue dropped to $2.93 billion from $4.15 billion as the price of gold fell sharply.

Analysts, on average, had been expecting earnings of 41 cents a share on revenue of $2.8 billion, according to Thomson Reuters I/B/E/S.

PORGERA CUT SHORT

Barrick said it has cut its mine life estimate for Porgera in Papua New Guinea to nine years from 13 years, citing a new plan that focuses on higher-quality underground ore. It took a $595 million impairment charge on the mine.

The miner said it expects gold production in 2014 of between 6 and 6.5 million ounces, down from 7.2 million ounces in 2013, largely due to lower output from its Cortez mine in Nevada and the recent sale of some high-cost, short-life mines.

Barrick sees costs per ounce rising sharply at Cortez, one of its biggest mines, where grades are expected to fall this year, as forecast in the mine plan.

All-in sustaining costs are expected to jump to between $750 and $780 an ounce, from $498 an ounce in the fourth quarter.

Barrick took $2.82 billion in after-tax impairment charges in the fourth quarter. They include $896 million for its Pascua-Lama project, which was indefinitely suspended in the autumn.

The company has been clear that it will forge ahead with Pascua-Lama when the time is right, despite permitting issues, delays and huge cost overruns that have plagued the project.

 

© 2017 Thomson/Reuters. All rights reserved.

 
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Barrick Gold Corp., the world's largest gold miner, reported a big fourth-quarter loss on Thursday as it took a hefty impairment charge, cut its gold reserve estimate by 26 percent and said costs per ounce would likely rise this year.
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2014-49-13
Thursday, 13 Feb 2014 09:49 AM
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