Barrick Gold’s report of its first quarter 2015 financial and operating results included a note that, following a Zambian government decision to drop a recently enacted 20% gross royalty on open-pit mines, the company’s Lumwana copper will continue operations as usual. Barrick announced on December 18, 2014, that it intended to suspend operations at Lumwana following passage of legislation that raised the royalty rate on the country’s open-pit mining operations from 6% to 20% (E&MJ, January 2015, p 18).
The Barrick note stated that on April 20, the Zambian government announced amendments to the country’s mining tax regime to replace the 20% gross royalty with a 9% royalty, along with reintroduction of a 30% corporate income tax and a 15% variable profits tax. “Based on our initial analysis, this system would enable Lumwana to remain free cash flow positive at current copper prices,” Barrick said.
Lumwana produced 66 million lb of copper during the first quarter of 2015 at C1 cash costs of $1.89/lb. Barrick is forecasting full-year production in the range of 250 million to 270 million lb at C1 cash costs of $1.90 to $2.15/lb.