Officials at Barrick Gold have reported solid Q4 and 2013 results amid varied cross-business strategies, including reductions, ahead of 2014 guidance. Five core mines met expectations, producing 4 million oz; at 55% of output, they are forecast at 60% this year.
CEO Jamie Sokalsky was pleased. “The framework we adopted in 2012 put us in a stronger position,” he said. “We have increased operational excellence, our asset portfolio and greater returns even if producing fewer ounces.”
Last year, for example, Barrick improved performance at Zambia’s Lumwana copper mine while near-term cash flow improved alongside temporary suspension of the Pascua-Lama complex straddling the border of Chile and Peru.
In Q3, meanwhile, the Toronto-based miner announced divestment of Barrick Energy comprised of six high-cost, non-core mines and other assets totaling $1 billion.
Production prioritizations were completed to improve $2.82 billion in impairments, some related to Pascua-Lama. The company also recorded an $896 million impairment from Q4 construction suspension.
Pascua Lama’s suspension for environmental and regulatory compliance is slated for Q3 2014 completion. The company anticipated incurring $300 million 2014 costs for the ramp-down. Restarting depends on economic and regulatory requirements.
Remaining development will occur in stages, facilitating planning, execution and cost control. Barrick will further seek to improve returns, including partnerships; the asset has a 25-year mine life.
Other priorities included fosing on Porgera in Papua New Guinea, where Barrick recorded a $595 million impairment from plan changes focusing on higher-grade, underground ore; Porgera’s life fell to nine from 13 years.
Sustained operating cost inflation, meanwhile, led to a life-of-mine reduction at Veladero in Argentina, resulting in a $300 million impairment.
An update to the life-of-mine plan at Saudi Arabia’s Jabal Sayid copper mine showed a net value decrease while fair value was impacted by production delays, said officials. Consequently, Barrick recorded a $303 million impairment. But in an annual goodwill test, the Barrick also recognized a $551 milllion impairment for its Australia Pacific gold segment, related to Poguera’s lower estimated fair value.
In 2014, gold production is forecast at up to 6.5 million oz. Lower 2014 output reflects divestment in high-cost, short-life mines, lower production from Cortez in Nevada, and the closure of Pierina in Peru. The declines will be offset by an increase at Pueblo Viejo in the Dominican Republic.
The Cortez asset produced 240,000 oz in Q4. Despite lower 2014 forecasts, Cortez remains one of the largest, most attractive gold assets in the world, said Barrick. As anticipated, production in 2014 is forecast at up to 975,000 oz, primarily due to ore grade decreases. In Q4, Goldstrike, also in Nevada, produced 240,000 oz. The autoclave facility is undergoing modifications enabling the prolific asset to yield 4 million oz.
Project expansion from modified autoclaves are expected to contribute up to 0.450 million oz of annual production by 2019. Goldstrike is expected to produce up to 0.915 million oz in 2014, increasing to more than 1 million oz in 2015.
