Barrick Reports Third Quarter 2014 Results
TORONTO, ONTARIO--(Marketwired - Oct 29, 2014) - Barrick Gold Corp. (NYSE:ABX)(TSX:ABX) (Barrick or the company) today reported third quarter net earnings of $125 million ($0.11 per share). Adjusted net earnings were $222 million ($0.19 per share). Operating cash flow was $852 million. The company reported strong quarterly results with solid production and lower than expected costs which drove the second reduction to annual all-in sustaining cost guidance this year.
| OPERATING HIGHLIGHTS AND GUIDANCE | |||
| Third Quarter | Revised | Previous | |
| Gold | 2014 | 2014 Guidance | 2014 Guidance |
| Production (000s of ounces) | 1,649 | 6,100-6,400 | 6,000-6,500 |
| All-in sustaining costs ($ per ounce) | 834 | 880-920 | 900-940 |
| Adjusted operating costs ($ per ounce) | 589 | 580-630 | |
| Copper | |||
| Production (millions of pounds) | 131 | 440-460 | 410-440 |
| C1 cash costs ($ per pound) | 1.82 | 1.90-2.00 | 1.90-2.10 |
| Total Capital Expenditures ($ millions) | 604 | 2,200-2,500 | |
"We are pleased to report another quarter of strong operating results, underpinned by a disciplined business model that prioritizes shareholder returns," said Kelvin Dushnisky, Co-President of Barrick. "We are focused on the best assets in the best regions, where we see the most potential to create value for shareholders, areas where we have already established distinctive geological and technical knowledge and strong partnerships. We will only invest in mines and development opportunities that can generate strong returns and free cash flow through commodity cycles. This is reflected in the priorities we have defined for Barrick."
"Operational excellence remains a top priority for Barrick. Our performance in the third quarter reflects the quality of our mines and our people," said Jim Gowans, Co-President of Barrick. "Our operating teams continue their relentless efforts to improve performance and cut costs. As a result, we were able to reduce annual cost guidance for the second time this year."
COMPANY PRIORITIES
This has been a year of transition for the leadership of Barrick. On April 30, 2014, John L. Thornton assumed the Chairman role and the Board of Directors was strengthened through the addition of four new independent directors. On July 16, 2014, the company announced a new executive management structure, including the appointment of Kelvin Dushnisky and Jim Gowans as Co-Presidents, to seamlessly drive the business and execute on Barrick's priorities. Since that time, two more independent directors have joined the Board of Directors and there have been additional changes to strengthen the executive team.
These changes have rejuvenated the leadership of Barrick and are directed at one overriding objective - to make Barrick the investment of choice among gold producers.
To achieve this objective, the company is focused on the following priorities to drive shareholder value:
- Operational Excellence -- Excel in all areas of the company, including delivering the full potential of its mines and resources. Put the best people in key roles and enable them to deliver.
- Best Assets and Regions -- Focus on assets with the most potential in core regions.
- Strong Partnerships -- Establish deep relationships with key stakeholders such as governments, suppliers, and local communities for performance and growth.
- Financial Flexibility -- Restore the balance sheet to a position of strength.
- Focus on Returns -- Improve free cash flow generation and shareholder returns through operating efficiencies and profitable growth, including the prioritization of near mine opportunities. All investments must meet return on investment thresholds.
FINANCIAL HIGHLIGHTS
Third quarter 2014 adjusted net earnings were $222 million ($0.19 per share)1 compared to $577 million ($0.58 per share) in the prior year period. The decrease was primarily due to lower gold and copper sales volumes and lower realized gold and copper prices, partially offset by lower cost of sales applicable to gold and copper. Net earnings for the third quarter were $125 million ($0.11 per share) compared to net earnings of $172 million ($0.17 per share) in the prior year quarter. Significant adjusting items for the quarter include:
- $51 million in unrealized losses on non-hedge derivative instruments; and
- $42 million in unrealized foreign currency translation losses.
Third quarter operating cash flow of $852 million compares to $1.2 billion in the prior year period. The decrease in operating cash flow primarily reflects lower sales volumes and lower gross margins, partially offset by a decrease in income tax payments.
FINANCIAL FLEXIBILITY
Barrick is committed to restoring its balance sheet to a position of strength. Maintaining financial flexibility will be a key driver of the company's future strategic direction. Barrick's strong underlying business underpins its liquidity. The company's five cornerstone mines produced 1.0 million ounces of gold at average all-in sustaining costs (AISC) of $696 per ounce2 in the third quarter.
These mines are anticipated to contribute about 60 percent of production in 2014 at average AISC of $730-$780 per ounce, maintaining Barrick's position in the first quartile of the industry cost curve.
The company has a modest debt repayment schedule over the next three years with approximately $200 million maturing by the end of 2015 and less than $1.0 billion due by the end of 2017. Including the company's $4.0 billion undrawn credit facility and $2.7 billion of cash3, Barrick had significant liquidity at the end of the third quarter.
GOLDRUSH AND OTHER OPPORTUNITIES IN NEVADA
The company is concentrating its efforts on the best regions where it has a competitive advantage. Barrick will accelerate the identification and advancement of profitable growth opportunities in these core regions. A regional strategy allows the company to leverage its competitive strengths, which include deep geological and technical expertise as well as strong local relationships. This will help identify the best prospects first and permit them as efficiently as possible, translating into less time to production.
Opportunities at or near existing operations will be the first priority, minimizing risk and maximizing return on invested capital. Accordingly, the company continues to focus its exploration and growth efforts on Nevada. It is among the regions of the world with the best geological potential for gold, has a well-established mining industry, and an area where Barrick has strong relationships with key stakeholders and a proven track record of success. Approximately 50 percent of Barrick's 2014 exploration budget4 is allocated to Nevada, with a large majority allocated to advance Goldrush, the only significant greenfield discovery by a major gold producer in the past five years. Beyond Goldrush, Barrick has several other growth opportunities and projects in Nevada with the potential to meet company risk-adjusted return hurdles.
The Goldrush project, located about six kilometers from the Cortez mine, is progressing through a prefeasibility study which remains on schedule for completion in mid-2015. Infill drilling continues to demonstrate continuity of high grades. A number of development options are under consideration, including underground mining or a combination of both underground and open pit mining. The company is increasingly certain that there will be an underground mining component. Barrick submitted a permit application for twin exploration declines in the second quarter. The declines will help to better define the existing resource and allow the company to test for additional mineralization beyond the northern end of the deposit.
Turquoise Ridge contains over 5.0 million ounces (75 percent basis) in reserves at an average grade of 17.3 grams per tonne5, and is the highest reserve grade deposit in the company's operating portfolio. Barrick believes Turquoise Ridge has the potential to become another core mine. The operation is currently restricted by haulage and ventilation constraints. One option being considered is an additional shaft which could increase production by up to 75 percent for five to eight years. Drilling of the northern extension of the deposit is exceeding expectations, and is supporting a prefeasibility study on the shaft scenario which is expected to be completed in early 2015.
At Cortez, the Lower Zone is characterized by strong and continuous ore zones. A prefeasibility study to evaluate deeper mining below the currently permitted level is expected to be completed by late 2015. Below this level, the Lower Zone is mostly oxide and higher grade than the zones above. Drilling has yet to determine the limits of the Lower Zone and recent drilling results have met or exceeded expectations. Based on these results, the Lower Zone exploration drift will be extended another 500 feet to the south in early 2015 to enable further step-out drilling.
The Spring Valley project, 70 percent owned by Barrick and approximately 60 miles west of Cortez, continues to advance through a prefeasibility study which is on track for completion in late 2015. This is a low capital cost, heap leach project with the potential to become a standalone mine. Barrick expects to report an initial resource estimate with its 2014 year-end results.
OPERATING HIGHLIGHTS
Cortez
The Cortez mine produced 273 thousand ounces at AISC of $589 per ounce in the third quarter. Production in 2014 is expected to be 880-920 thousand ounces, below previous guidance of 925-975 thousand ounces. This is primarily due to negative grade reconciliations which impacted production in the first half of 2014. AISC guidance remains at the high end of the $750-$780 per ounce range. In 2015, production is expected to be below one million ounces due to the sequencing and mining of ore and waste phases.
Goldstrike
Goldstrike produced 239 thousand ounces in the third quarter at AISC of $921 per ounce. Production benefited from higher processed grades. AISC were better than expected due to lower processing costs, mainly as a result of processing less acidic ore and lower sustaining capital. Modifications to the autoclave facility for the thiosulfate project are almost complete and will enable Goldstrike to accelerate the cash flow from about 4.0 million stockpiled ounces through the addition of a patented thiosulfate process. This is expected to contribute an average of 350-450 thousand ounces of annual production at similar AISC to the overall operation in the first full five years. First production is on track for the fourth quarter of 2014 at a total capital cost of approximately $620 million. Lower production is expected in the fourth quarter in part from an autoclave shutdown to facilitate start-up of the thiosulfate project and also from expected lower grades as stripping begins for the next phase of the open pit. Production at Goldstrike in 2014 is expected to be 865-915 thousand ounces and AISC guidance has been reduced to $870-$900 per ounce as a result of lower lime consumption at the roaster. In 2015, production is expected to exceed 1.0 million ounces6 with contributions from the thiosulfate process.
Pueblo Viejo
Barrick's 60 percent share of production from Pueblo Viejo in the third quarter was 168 thousand ounces at AISC of $551 per ounce. Production and recoveries were impacted by planned autoclave shutdowns for maintenance. Fourth quarter production is expected to benefit from higher grade ore. The copper circuit is in the commissioning phase and copper shipments are expected to commence in the first quarter of 2015. Production in 2014 is expected to be 600-700 thousand ounces at AISC of $510-$610 per ounce.
Lagunas Norte
Lagunas Norte produced 157 thousand ounces at AISC of $554 per ounce in the third quarter. Production was higher in the third quarter due to processing higher grade material and a faster leach cycle from stacking ore on the new area of the leach pad. Fourth quarter production is expected to benefit from higher grades. Production in 2014 is anticipated to be 570-610 thousand ounces and AISC guidance has been reduced to $590-$620 per ounce.
Veladero
The Veladero mine produced 178 thousand ounces at AISC of $822 per ounce in the third quarter. Production benefited from higher grades on positive grade reconciliations. This trend is expected to continue into the fourth quarter. Production guidance in 2014 has been increased to 680-720 thousand ounces and AISC guidance has been reduced to $890-$920 per ounce.
North America Portfolio
Barrick's other North American mines consist of Bald Mountain, Round Mountain, Turquoise Ridge, Golden Sunlight, Ruby Hill and Hemlo. This segment produced 213 thousand ounces in the third quarter at AISC of $980 per ounce. In 2014, production is now expected to be at the high end of the 795-845 thousand ounce range and AISC guidance has been reduced to $980-$1,000 per ounce.
Australia Pacific
Australia Pacific produced 292 thousand ounces at AISC of $855 per ounce in the third quarter. The Porgera mine contributed 137 thousand ounces at AISC of $928 per ounce and benefited from higher throughput and grades. Production guidance in 2014 has been increased to 1,050-1,125 thousand ounces and AISC guidance has been reduced to $885-$910 per ounce.
African Barrick Gold (ABG)
Third quarter attributable production from ABG was 122 thousand ounces at AISC of $1,098 per ounce. Barrick's share of 2014 production from ABG is anticipated to be above the high end of the 430-460 thousand ounce range and AISC at the low end of the $1,100-$1,175 per ounce range.
Global Copper
Copper production in the third quarter was 131 million pounds at C1 cash costs of $1.82 per pound7. Copper production guidance for 2014 has been increased to 440-460 million pounds and C1 cash costs have been narrowed to $1.90-$2.00 per pound, primarily due to an earlier than expected re-start of operations at Lumwana in July.
Lumwana contributed 75 million pounds at C1 cash costs of $1.84 per pound. Subsequent to quarter end, the Zambian government proposed changes to the country's mining tax regime that would replace the current corporate income tax and variable profit tax with a 20 percent royalty, which, if approved, would take effect on January 1, 2015. The application of a 20 percent royalty rate compared to the 6 percent royalty the company is currently paying would challenge the economic viability of the mine.
The Zaldívar mine produced 56 million pounds in the third quarter at C1 cash costs of $1.79 per pound. The mine continues to be a steady generator of free cash flow.
In July, Barrick reached an agreement to form a joint venture with Saudi Arabian Mining Company (Ma'aden) to operate the Jabal Sayid copper mine. The transaction is expected to close in the fourth quarter of 2014. First shipments of concentrate are expected in early 2016. Once the mine reaches full production, the average annual output will be 100 million pounds per year, with the potential to increase to 130 million pounds, at first quartile C1 cash costs.
PASCUA-LAMA PROJECT
The project is currently on care and maintenance. A decision to re-start development will depend on improved economics and more certainty regarding legal and permitting matters. Barrick is in the final stages of preliminary engineering for the permanent water management system and is discussing the permitting requirements necessary to obtain approval for construction with Chilean regulators. The company is making progress on establishing a constructive dialogue with a group of 15 Diaguita indigenous communities and associations in Chile's Huasco province through a Memorandum of Understanding (MoU). Under the MoU, Barrick is providing these groups with technical and environmental information on Pascua-Lama along with financial resources and materials to facilitate their analysis of the information.
Barrick continues to explore opportunities to improve the project's risk-adjusted returns, including engineering optimization, strategic partnerships or royalty and other income streaming agreements.
1 Adjusted net earnings and adjusted net earnings per share are non-GAAP financial performance measures with no standardized definition under IFRS. See pages 46-51 of Barrick's Third Quarter 2014 Report.
2 All-in sustaining costs per ounce is a non-GAAP financial performance measure with no standardized definition under IFRS. See pages 46-51 of Barrick's Third Quarter 2014 Report.
3 Includes $557 million held at African Barrick Gold and Pueblo Viejo, which may not be readily deployed outside of African Barrick Gold and Pueblo Viejo.
4 Barrick's exploration programs are designed and conducted under the supervision of Robert Krcmarov, Senior Vice President, Global Exploration of Barrick.
5 Turquoise Ridge reserve grade is 0.505 ounces per ton as of December 31, 2013. For a breakdown of reserves and resources by category and additional information relating to reserves and resources, see pages 27-37 of Barrick's 2013 Form 40-F.
6 Actual results will vary depending on how the ramp-up of the thiosulfate project progresses.
7 C1 cash costs per pound is a non-GAAP financial performance measure with no standardized definition under IFRS. See pages 46-51 of Barrick's Third Quarter 2014 Report.
APPENDIX - 2014 Operating and Financial Guidance
| OPERATING GUIDANCE | ||||
| Current | Previous | |||
| Gold | Production (000's of ounces) | AISC ($ per ounce) | Production (000's of ounces) | AISC ($ per ounce) |
| Cortez | 880-920 | 750-780 (high end) | 925-975 (low end) | 750-780 (high end) |
| Goldstrike | 865-915 | 870-900 | 865-915 (high end) | 920-950 (low end) |
| Pueblo Viejo (60%) | 600-700 | 510-610 | 600-700 | 510-610 (high end) |
| Lagunas Norte | 570-610 | 590-620 | 570-610 (high end) | 640-680 (low end) |
| Veladero | 680-720 | 890-920 | 650-700 (high end) | 940-990 (low end) |
| 3,700-3,900 | 730-780 | 3,800-4,000 | 750-800 | |
| North America Portfolio | 795-845 (high end) | 980-1,000 | 795-845 | 1,075-1,100 (low end) |
| Australia Pacific | 1,050-1,125 | 885-910 | 1,000-1,080 (high end) | 1,050-1,100 (low end) |
| African Barrick Gold | 430-460 (above high end) | 1,100-1,175 (low end) | 430-460 (above high end) | 1,100-1,175 (low end) |
| Total Gold | 6,100-6,400 | 880-920 | 6,000-6,500 | 900-940 |
| Copper | Production (millions of pounds) | C1 cash costs ($ per pound) | Production (millions of pounds) | C1 cash costs ($ per pound) |
| Total Copper | 440-460 | 1.90-2.00 | 410-440 | 1.90-2.10 |
| FINANCIAL GUIDANCE | |||
| Current | Previous | ||
| ($ millions) | ($ millions) | ||
| G&A | 380-400 | 380-400 | |
| Other expense | 475-525 | 475-525 | |
| Finance costs | 800-825 | 800-825 | |
| Exploration & evaluation | 200-240 | 200-240 | |
| Capital expenditure | |||
| Mine site sustaining | 1,800-2,000 | 1,800-2,000 | |
| Mine site expansion | 300-375 | 300-375 | |
| Projects | 100-125 | 100-125 | |
| Total capex | 2,200-2,500 | 2,200-2,500 | |
| Effective income tax rate | ~50% | ~50% | |
| Key Statistics | |||||||||||
| Barrick Gold Corp. | |||||||||||
| (in United States dollars) | Three months ended September 30 | Nine months ended September 30 | |||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||
| Operating Results | |||||||||||
| Gold production (thousands of ounces)1 | 1,649 | 1,845 | 4,722 | 5,453 | |||||||
| Gold sold (thousands of ounces)1 | 1,578 | 1,783 | 4,712 | 5,345 | |||||||
| Per ounce data | |||||||||||
| Average spot gold price | $ | 1,282 | $ | 1,326 | $ | 1,288 | $ | 1,456 | |||
| Average realized gold price2 | 1,285 | 1,323 | 1,286 | 1,453 | |||||||
| Adjusted operating costs2 | 589 | 573 | 588 | 564 | |||||||
| All-in sustaining costs2 | 834 | 914 | 844 | 919 | |||||||
| All-in costs2 | 975 | 1,182 | 951 | 1,269 | |||||||
| Adjusted operating costs (on a co-product basis)2 | 607 | 593 | 609 | 588 | |||||||
| All-in sustaining costs (on a co-product basis)2 | 852 | 934 | 865 | 943 | |||||||
| All-in costs (on a co-product basis)2 | 993 | 1,202 | 972 | 1,293 | |||||||
| Copper production (millions of pounds) | 131 | 139 | 302 | 400 | |||||||
| Copper sold (millions of pounds) | 112 | 135 | 296 | 385 | |||||||
| Per pound data | |||||||||||
| Average spot copper price | $ | 3.17 | $ | 3.21 | $ | 3.15 | $ | 3.35 | |||
| Average realized copper price2 | 3.09 | 3.40 | 3.08 | 3.41 | |||||||
| C1 cash costs2 | 1.82 | 1.69 | 1.98 | 1.94 | |||||||
| Depreciation3 | 0.44 | 0.29 | 0.40 | 0.36 | |||||||
| Other4 | 0.10 | 0.17 | 0.12 | 0.15 | |||||||
| C3 fully allocated costs2 | 2.36 | 2.15 | 2.50 | 2.45 | |||||||
| Financial Results (millions) | |||||||||||
| Revenues | $ | 2,598 | $ | 2,985 | $ | 7,662 | $ | 9,585 | |||
| Net earnings (loss)5 | 125 | 172 | (56 | ) | (7,536 | ) | |||||
| Adjusted net earnings2 | 222 | 577 | 619 | 2,163 | |||||||
| Operating cash flow | 852 | 1,231 | 1,925 | 3,223 | |||||||
| Adjusted operating cash flow2 | 852 | 1,300 | 1,925 | 3,274 | |||||||
| Per Share Data (dollars) | |||||||||||
| Net earnings (loss) (basic) | 0.11 | 0.17 | (0.05 | ) | (7.53 | ) | |||||
| Adjusted net earnings (basic)2 | 0.19 | 0.58 | 0.53 | 2.16 | |||||||
| Net earnings (loss) (diluted) | 0.11 | 0.17 | (0.05 | ) | (7.53 | ) | |||||
| Weighted average basic common shares (millions) | 1,165 | 1,001 | 1,165 | 1,001 | |||||||
| Weighted average diluted common shares (millions)6 | 1,165 | 1,001 | 1,165 | 1,001 | |||||||
| As at | As at | ||||||||||
| September 30, | December 31, | ||||||||||
| 2014 | 2013 | ||||||||||
| Financial Position (millions) | |||||||||||
| Cash and equivalents | $ | 2,705 | $ | 2,404 | |||||||
| Non-cash working capital | 3,341 | 3,060 | |||||||||
| 1 | Production includes African Barrick Gold ("ABG") on a 73.9% basis until February 28, 2014 and a 63.9% basis thereafter and Pueblo Viejo on a 60% basis, both of which reflect our equity share of production. Also includes production from Yilgarn South up to September 30, 2013, Plutonic up to January 31, 2014, Kanowna up to March 1, 2014 and Marigold up to April 4, 2014, the effective dates of sale of these assets. Sales include our equity share of gold sales from ABG and Pueblo Viejo. |
| 2 | Realized price, adjusted operating costs, all-in sustaining costs, all-in costs, adjusted operating costs (on a co-product basis), all-in sustaining costs (on a co-product basis), all-in costs (on a co-product basis), C1 cash costs, C3 fully allocated costs, adjusted net earnings and adjusted operating cash flow are non-gaap financial performance measures with no standard definition under IFRS. Refer to the Non-GAAP Financial Performance Measures section of the Company's MD&A. |
| 3 | Represents equity depreciation expense divided by equity pounds of copper sold. |
| 4 | For a breakdown, see reconciliation of cost of sales to C1 cash costs and C3 fully allocated costs per pound in the Non-GAAP Financial Performance Measures section of the Company's MD&A. |
| 5 | Net earnings (loss) represents net earnings (loss) attributable to the equity holders of the Company. |
| 6 | Fully diluted includes dilutive effect of stock options. |
| Production and Cost Summary | ||||||||||||||||||||
| Gold Production (attributable ounces) (000's) | All-in sustaining costs5 ($/oz) | |||||||||||||||||||
| Three months ended | Nine months ended | Three months ended | Nine months ended | |||||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Gold | ||||||||||||||||||||
| Goldstrike | 239 | 233 | 715 | 650 | $ | 921 | $ | 874 | $ | 846 | $ | 955 | ||||||||
| Cortez | 273 | 333 | 717 | 1,093 | 589 | 470 | 663 | 416 | ||||||||||||
| Pueblo Viejo | 168 | 113 | 488 | 331 | 551 | 770 | 575 | 743 | ||||||||||||
| Lagunas Norte | 157 | 136 | 406 | 412 | 554 | 696 | 552 | 633 | ||||||||||||
| Veladero | 178 | 154 | 525 | 499 | 822 | 874 | 786 | 785 | ||||||||||||
| North America Portfolio1 | 213 | 222 | 641 | 627 | 980 | 1,246 | 967 | 1,250 | ||||||||||||
| Australia Pacific2 | 292 | 497 | 865 | 1,409 | 855 | 920 | 851 | 1,001 | ||||||||||||
| African Barrick Gold3 | 122 | 122 | 354 | 352 | 1,098 | 1,270 | 1,111 | 1,411 | ||||||||||||
| Other4 | 7 | 35 | 11 | 80 | 3,025 | 1,027 | 2,424 | 1,218 | ||||||||||||
| Total | 1,649 | 1,845 | 4,722 | 5,453 | $ | 834 | $ | 914 | $ | 844 | $ | 919 | ||||||||
| Copper Production (attributable pounds) (millions) | C1 Cash Costs5 ($/lb) | ||||||||||||||||||
| Three months ended | Nine months ended | Three months ended | Nine months ended | ||||||||||||||||
| September 30, | September 30, | September 30, | September 30, | ||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | ||||||||||||
| Total | 131 | 139 | 302 | 400 | $ | 1.82 | $ | 1.69 | $ | 1.98 | $ | 1.94 | |||||||
| Total Gold Production Costs ($/oz) | ||||||||||||||
| Three months ended | Nine months ended | |||||||||||||
| September 30, | September 30, | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||
| Direct mining costs before impact of hedges at market foreign exchange rates | $ | 585 | $ | 605 | $ | 592 | $ | 607 | ||||||
| Gains realized on currency hedge and commodity hedge/economic hedge contracts | (17 | ) | (39 | ) | (20 | ) | (44 | ) | ||||||
| Other6 | - | (4 | ) | - | (11 | ) | ||||||||
| By-product credits | (18 | ) | (20 | ) | (21 | ) | (24 | ) | ||||||
| Royalties | 39 | 31 | 37 | 36 | ||||||||||
| Adjusted operating costs5 | 589 | 573 | 588 | 564 | ||||||||||
| Depreciation | 198 | 208 | 198 | 205 | ||||||||||
| Other6 | - | 4 | - | 11 | ||||||||||
| Total production costs | $ | 787 | $ | 785 | $ | 786 | $ | 780 | ||||||
| Adjusted operating costs5 | $ | 589 | $ | 573 | $ | 588 | $ | 564 | ||||||
| General & administrative costs | 41 | 50 | 46 | 44 | ||||||||||
| Rehabilitation - accretion and amortization (operating sites) | 19 | 16 | 21 | 19 | ||||||||||
| Mine on-site exploration and evaluation costs | 4 | 10 | 3 | 8 | ||||||||||
| Mine development expenditures | 94 | 157 | 109 | 162 | ||||||||||
| Sustaining capital expenditures | 87 | 108 | 77 | 122 | ||||||||||
| All-in sustaining costs5 | $ | 834 | $ | 914 | $ | 844 | $ | 919 | ||||||
| All-in costs5 | $ | 975 | $ | 1,182 | $ | 951 | $ | 1,269 | ||||||
| Total Copper Production Costs ($/lb) | |||||||||||||
| Three months ended | Nine months ended | ||||||||||||
| September 30, | September 30, | ||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||
| C1 cash costs5 | $ | 1.82 | $ | 1.69 | $ | 1.98 | $ | 1.94 | |||||
| Depreciation7 | 0.44 | 0.29 | 0.40 | 0.36 | |||||||||
| Other8 | 0.10 | 0.17 | 0.12 | 0.15 | |||||||||
| C3 fully allocated costs5 | $ | 2.36 | $ | 2.15 | $ | 2.50 | $ | 2.45 | |||||
| 1 | Includes production from Marigold up to April 4, 2014, the effective date of sale of this asset. |
| 2 | Includes production from Yilgarn South up to September 30, 2013, Plutonic up to January 31, 2014 and Kanowna up to March 1, 2014, the effective dates of sale of these assets. |
| 3 | Figures relating to African Barrick Gold are presented on a 73.9% basis until February 28, 2014 and a 63.9% basis thereafter, which reflects our equity share of production. |
| 4 | Production and all-in sustaining costs include Pierina. |
| 5 | Adjusted operating costs, all-in sustaining costs, all-in costs, C1 cash costs and C3 fully allocated costs are non-GAAP financial performance measures with no standard meaning under IFRS. Refer to the Non-GAAP Financial Performance Measures section of the Company's MD&A. |
| 6 | Represents the Barrick Energy gross margin divided by equity ounces of gold sold. Barrick Energy was divested in the third quarter of 2013. |
| 7 | Represents equity depreciation expense divided by equity pounds of copper sold. |
| 8 | For a breakdown, see reconciliation of cost of sales to C1 cash costs and C3 fully allocated costs per pound in the Non-GAAP Financial Performance Measures section of the Company's MD&A. |
| Consolidated Statements of Income | |||||||||||||
| Barrick Gold Corp. | |||||||||||||
| (in millions of United States dollars, except per share data) (Unaudited) | Three months ended September 30, | Nine months ended September 30, | |||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||
| Revenue (notes 5 and 6) | $ | 2,598 | $ | 2,985 | $ | 7,662 | $ | 9,585 | |||||
| Costs and expenses (income) | |||||||||||||
| Cost of sales (notes 5 and 7) | 1,642 | 1,788 | 4,924 | 5,430 | |||||||||
| General and administrative expenses (note 11) | 98 | 100 | 283 | 297 | |||||||||
| Exploration and evaluation (note 8) | 45 | 48 | 130 | 154 | |||||||||
| Other expense (income) (note 10A) | 83 | 169 | 425 | 406 | |||||||||
| Impairment charges (note 10B) | 18 | 13 | 542 | 9,345 | |||||||||
| Loss (gain) on non-hedge derivatives (note 19D) | 65 | (19 | ) | - | (74 | ) | |||||||
| Income (loss) before finance items and income taxes | 647 | 886 | 1,358 | (5,973 | ) | ||||||||
| Finance items | |||||||||||||
| Finance income | 3 | 2 | 9 | 7 | |||||||||
| Finance costs (note 12) | (198 | ) | (122 | ) | (599 | ) | (391 | ) | |||||
| Income (loss) from continuing operations before income taxes | 452 | 766 | 768 | (6,357 | ) | ||||||||
| Income tax expense (note 13) | (275 | ) | (748 | ) | (687 | ) | (968 | ) | |||||
| Income (loss) from continuing operations | 177 | 18 | 81 | (7,325 | ) | ||||||||
| Loss from discontinued operations | - | (9 | ) | - | (506 | ) | |||||||
| Net income (loss) | $ | 177 | $ | 9 | $ | 81 | $ | (7,831 | ) | ||||
| Attributable to: | |||||||||||||
| Equity holders of Barrick Gold Corp. | $ | 125 | $ | 172 | $ | (56 | ) | $ | (7,536 | ) | |||
| Non-controlling interests (note 22) | $ | 52 | $ | (163 | ) | $ | 137 | $ | (295 | ) | |||
| Earnings (loss) per share data attributable to the equity holders of Barrick Gold Corp. (note 9) | |||||||||||||
| Income (loss) from continuing operations | |||||||||||||
| Basic | $ | 0.11 | $ | 0.18 | $ | (0.05 | ) | $ | (7.02 | ) | |||
| Diluted | $ | 0.11 | $ | 0.18 | $ | (0.05 | ) | $ | (7.02 | ) | |||
| Loss from discontinued operations | |||||||||||||
| Basic | $ | - | $ | (0.01 | ) | $ | - | $ | (0.51 | ) | |||
| Diluted | $ | - | $ | (0.01 | ) | $ | - | $ | (0.51 | ) | |||
| Net income (loss) | |||||||||||||
| Basic | $ | 0.11 | $ | 0.17 | $ | (0.05 | ) | $ | (7.53 | ) | |||
| Diluted | $ | 0.11 | $ | 0.17 | $ | (0.05 | ) | $ | (7.53 | ) | |||
The notes to these unaudited interim financial statements, which are contained in the Third Quarter Report 2014 available on our website are an integral part of these consolidated financial statements.
| Consolidated Statements of Comprehensive Income | |||||||||||||
| Barrick Gold Corp. | |||||||||||||
| (in millions of United States dollars) | Three months ended | Nine months ended | |||||||||||
| (Unaudited) | September 30, | September 30, | |||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||
| Net income (loss) | $ | 177 | $ | 9 | $ | 81 | $ | (7,831 | ) | ||||
| Other comprehensive income (loss), net of taxes | |||||||||||||
| Items that may be reclassified subsequently to profit or loss: | |||||||||||||
| Unrealized gains (losses) on available-for-sale ("AFS") financial securities, net of tax $nil, $nil, $nil and $4 | (2 | ) | 4 | 20 | (22 | ) | |||||||
| Realized (gains) losses and impairments on AFS financial securities, net of tax $nil, $nil, $nil and ($2) | (7 | ) | 2 | 16 | 13 | ||||||||
| Unrealized gains (losses) on derivatives designated as cash flow hedges, net of tax $2, ($8), $3 and ($7) | (35 | ) | 4 | (7 | ) | (51 | ) | ||||||
| Realized (gains) losses on derivatives designated as cash flow hedges, net of tax ($1), $20, $nil and $61 | (22 | ) | (60 | ) | (76 | ) | (242 | ) | |||||
| Currency translation adjustments, net of tax $nil, $nil, $nil and $nil | (26 | ) | 24 | (19 | ) | (74 | ) | ||||||
| Total other comprehensive income (loss) | (92 | ) | (26 | ) | (66 | ) | (376 | ) | |||||
| Total comprehensive income (loss) | $ | 85 | $ | (17 | ) | $ | 15 | $ | (8,207 | ) | |||
| Attributable to: | |||||||||||||
| Equity holders of Barrick Gold Corp. | |||||||||||||
| Continuing operations | $ | 33 | $ | 135 | $ | (122 | ) | $ | (7,375 | ) | |||
| Discontinued operations | $ | - | $ | 11 | $ | - | $ | (537 | ) | ||||
| Non-controlling interests | $ | 52 | $ | (163 | ) | $ | 137 | $ | (295 | ) | |||
The notes to these unaudited interim financial statements, which are contained in the Third Quarter Report 2014 available on our website are an integral part of these consolidated financial statements.
| Consolidated Statements of Cash Flow | |||||||||||||
| Barrick Gold Corp. | |||||||||||||
| (in millions of United States dollars) | Three months ended | Nine months ended | |||||||||||
| (Unaudited) | September 30, | September 30, | |||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||
| OPERATING ACTIVITIES | |||||||||||||
| Net income (loss) from continuing operations | $ | 177 | $ | 18 | $ | 81 | $ | (7,325 | ) | ||||
| Adjusted for the following items: | |||||||||||||
| Depreciation | 412 | 441 | 1,214 | 1,290 | |||||||||
| Finance costs | 198 | 122 | 599 | 391 | |||||||||
| Impairment charges (note 10B) | 18 | 13 | 542 | 9,345 | |||||||||
| Income tax expense (note 13) | 275 | 748 | 687 | 968 | |||||||||
| Increase in inventory | (12 | ) | (47 | ) | (7 | ) | (280 | ) | |||||
| Proceeds from settlement of hedge contracts | - | - | - | 219 | |||||||||
| Loss (gain) on non-hedge derivatives | 65 | (19 | ) | - | (74 | ) | |||||||
| Gain on sale of long-lived assets/investments | (14 | ) | (16 | ) | (37 | ) | (25 | ) | |||||
| Other operating activities (note 14A) | (120 | ) | 149 | (345 | ) | (316 | ) | ||||||
| Operating cash flows before interest and income taxes | 999 | 1,409 | 2,734 | 4,193 | |||||||||
| Interest paid | (77 | ) | (36 | ) | (429 | ) | (253 | ) | |||||
| Income taxes paid | (70 | ) | (141 | ) | (380 | ) | (767 | ) | |||||
| Net cash provided by operating activities from continuing operations | 852 | 1,232 | 1,925 | 3,173 | |||||||||
| Net cash (used in) provided by operating activities from discontinued operations | - | (1 | ) | - | 50 | ||||||||
| Net cash provided by operating activities | 852 | 1,231 | 1,925 | 3,223 | |||||||||
| INVESTING ACTIVITIES | |||||||||||||
| Property, plant and equipment | |||||||||||||
| Capital expenditures (note 5) | (653 | ) | (1,205 | ) | (1,885 | ) | (4,136 | ) | |||||
| Sales proceeds | 18 | - | 55 | 3 | |||||||||
| Divestitures | - | 417 | 166 | 417 | |||||||||
| Investments sales | 67 | - | 119 | 18 | |||||||||
| Other investing activities (note 14B) | (2 | ) | (86 | ) | (81 | ) | (217 | ) | |||||
| Net cash used in investing activities from continuing operations | (570 | ) | (874 | ) | (1,626 | ) | (3,915 | ) | |||||
| Net cash used in investing activities from discontinued operations | - | (7 | ) | - | (64 | ) | |||||||
| Net cash used in investing activities | (570 | ) | (881 | ) | (1,626 | ) | (3,979 | ) | |||||
| FINANCING ACTIVITIES | |||||||||||||
| Proceeds on exercise of stock options | - | - | - | 1 | |||||||||
| Proceeds from divestment of 10% of issued ordinary share capital of ABG | - | - | 186 | - | |||||||||
| Debt | |||||||||||||
| Proceeds | 6 | 124 | 139 | 5,234 | |||||||||
| Repayments | (71 | ) | (565 | ) | (164 | ) | (3,836 | ) | |||||
| Dividends | (59 | ) | (50 | ) | (175 | ) | (450 | ) | |||||
| Funding from non-controlling interests | 2 | 2 | 4 | 34 | |||||||||
| Other financing activities (note 14C) | - | (7 | ) | - | (29 | ) | |||||||
| Net cash (used in) provided by financing activities from continuing operations | (122 | ) | (496 | ) | (10 | ) | 954 | ||||||
| Net cash used in financing activities from discontinued operations | - | - | - | - | |||||||||
| Net cash (used in) provided by financing activities | (122 | ) | (496 | ) | (10 | ) | 954 | ||||||
| Effect of exchange rate changes on cash and equivalents | (4 | ) | (1 | ) | (8 | ) | (12 | ) | |||||
| Net (decrease) increase in cash and equivalents | 156 | (147 | ) | 281 | 186 | ||||||||
| Cash and equivalents excluding assets classified as held for sale at the beginning of period | 2,549 | 2,422 | 2,404 | 2,097 | |||||||||
| Add: cash and equivalents of assets classified as held for sale at the beginning of period | - | 8 | 20 | - | |||||||||
| Cash and equivalents at the end of period | $ | 2,705 | $ | 2,283 | $ | 2,705 | $ | 2,283 | |||||
| Less: cash and equivalents of assets classified as held for sale at the end of period | - | - | - | - | |||||||||
| Cash and equivalents excluding assets classified as held for sale at the end of period | $ | 2,705 | $ | 2,283 | $ | 2,705 | $ | 2,283 | |||||
The notes to these unaudited interim financial statements, which are contained in the Third Quarter Report 2014 available on our website are an integral part of these consolidated financial statements.
| Consolidated Balance Sheets | |||||||
| Barrick Gold Corp. | |||||||
| (in millions of United States dollars) (Unaudited) | As at September 30, | As at December 31, | |||||
| 2014 | 2013 | ||||||
| ASSETS | |||||||
| Current assets | |||||||
| Cash and equivalents (note 19A) | $ | 2,705 | $ | 2,404 | |||
| Accounts receivable | 408 | 385 | |||||
| Inventories (note 15) | 2,700 | 2,679 | |||||
| Other current assets | 320 | 421 | |||||
| Total current assets (excluding assets classified as held for sale) | 6,133 | 5,889 | |||||
| Assets classified as held for sale | 576 | 323 | |||||
| Total current assets | 6,709 | 6,212 | |||||
| Non-current assets | |||||||
| Equity in investees | 28 | 27 | |||||
| Other investments | 33 | 120 | |||||
| Property, plant and equipment (note 16) | 21,425 | 21,688 | |||||
| Goodwill (note 17) | 5,519 | 5,835 | |||||
| Intangible assets | 310 | 320 | |||||
| Deferred income tax assets | 765 | 501 | |||||
| Non-current portion of inventory (note 15) | 1,685 | 1,679 | |||||
| Other assets | 1,016 | 1,066 | |||||
| Total assets | $ | 37,490 | $ | 37,448 | |||
| LIABILITIES AND EQUITY | |||||||
| Current liabilities | |||||||
| Accounts payable | $ | 1,661 | $ | 2,165 | |||
| Debt (note 19B) | 209 | 179 | |||||
| Current income tax liabilities | 198 | 75 | |||||
| Other current liabilities | 357 | 303 | |||||
| Total current liabilities (excluding liabilities classified as held for sale) | 2,425 | 2,722 | |||||
| Liabilities classified as held for sale | 16 | 162 | |||||
| Total current liabilities | 2,441 | 2,884 | |||||
| Non-current liabilities | |||||||
| Debt (note 19B) | 12,885 | 12,901 | |||||
| Provisions | 2,496 | 2,428 | |||||
| Deferred income tax liabilities | 2,587 | 2,258 | |||||
| Other liabilities | 1,058 | 976 | |||||
| Total liabilities | 21,467 | 21,447 | |||||
| Equity | |||||||
| Capital stock (note 21) | 20,863 | 20,869 | |||||
| Deficit | (7,812 | ) | (7,581 | ) | |||
| Accumulated other comprehensive loss | (135 | ) | (69 | ) | |||
| Other | 321 | 314 | |||||
| Total equity attributable to Barrick Gold Corp. shareholders | 13,237 | 13,533 | |||||
| Non-controlling interests (note 22) | 2,786 | 2,468 | |||||
| Total equity | 16,023 | 16,001 | |||||
| Contingencies and commitments (notes 15, 16 and 23) | |||||||
| Total liabilities and equity | $ | 37,490 | $ | 37,448 | |||
The notes to these unaudited interim financial statements, which are contained in the Third Quarter Report 2014 available on our website are an integral part of these consolidated financial statements.
| Consolidated Statements of Changes in Equity | |||||||||||||||||||||||
| Barrick Gold Corp. | Attributable to equity holders of the company | ||||||||||||||||||||||
| (in millions of United States dollars) (Unaudited) | Common Shares (in thousands) | Capital stock | Retained earnings (deficit) | Accumulated other comprehensive income (loss)1 | Other2 | Total equity attributable to shareholders | Non-controlling interests | Total equity | |||||||||||||||
| At January 1, 2014 | 1,164,652 | $ | 20,869 | $ | (7,581 | ) | $ | (69 | ) | $ | 314 | $ | 13,533 | $ | 2,468 | $ | 16,001 | ||||||
| Net (loss) income | - | - | (56 | ) | - | - | (56 | ) | 137 | 81 | |||||||||||||
| Total other comprehensive loss | - | - | - | (66 | ) | - | (66 | ) | - | (66 | ) | ||||||||||||
| Total comprehensive (loss) income | - | - | (56 | ) | (66 | ) | - | (122 | ) | 137 | 15 | ||||||||||||
| Transactions with owners | |||||||||||||||||||||||
| Dividends | - | - | (175 | ) | - | - | (175 | ) | - | (175 | ) | ||||||||||||
| Issued on exercise of stock options | 18 | - | - | - | - | - | - | - | |||||||||||||||
| Derecognition of stock option expense | - | (6 | ) | - | - | - | (6 | ) | - | (6 | ) | ||||||||||||
| Recognized on divestment of 10% of African Barrick Gold | - | - | - | - | 7 | 7 | 174 | 181 | |||||||||||||||
| Funding from non-controlling interests | - | - | - | - | - | - | 7 | 7 | |||||||||||||||
| Total transactions with owners | 18 | (6 | ) | (175 | ) | - | 7 | (174 | ) | 181 | 7 | ||||||||||||
| At September 30, 2014 | 1,164,670 | $ | 20,863 | $ | (7,812 | ) | $ | (135 | ) | $ | 321 | $ | 13,237 | $ | 2,786 | $ | 16,023 | ||||||
| At January 1, 2013 | 1,001,108 | $ | 17,926 | $ | 3,269 | $ | 463 | $ | 314 | $ | 21,972 | $ | 2,664 | $ | 24,636 | ||||||||
| Net loss | - | - | (7,536 | ) | - | - | (7,536 | ) | (295 | ) | (7,831 | ) | |||||||||||
| Total other comprehensive loss | - | - | - | (376 | ) | - | (376 | ) | - | (376 | ) | ||||||||||||
| Total comprehensive loss | - | - | (7,536 | ) | (376 | ) | - | (7,912 | ) | (295 | ) | (8,207 | ) | ||||||||||
| Transactions with owners | |||||||||||||||||||||||
| Dividends | - | - | (450 | ) | - | - | (450 | ) | - | (450 | ) | ||||||||||||
| Issued on exercise of stock options | 44 | 1 | - | - | - | 1 | - | 1 | |||||||||||||||
| Recognition of stock option expense | - | 8 | - | - | - | 8 | - | 8 | |||||||||||||||
| Funding from non-controlling interests | - | - | - | - | - | - | 34 | 34 | |||||||||||||||
| Other decrease in non-controlling interests | - | - | - | - | - | - | (14 | ) | (14 | ) | |||||||||||||
| Total transactions with owners | 44 | 9 | (450 | ) | - | - | (441 | ) | 20 | (421 | ) | ||||||||||||
| At September 30, 2013 | 1,001,152 | $ | 17,935 | $ | (4,717 | ) | $ | 87 | $ | 314 | $ | 13,619 | $ | 2,389 | $ | 16,008 | |||||||
| 1 | Includes cumulative translation losses at September 30, 2014: $99 million (September 30, 2013: losses of $61 million). |
| 2 | Includes additional paid-in capital as at September 30, 2014: $283 million (December 31, 2013: $276 million; September 30, 2013: $276 million) and convertible borrowings - equity component as at September 30, 2014: $38 million (December 31, 2013: $38 million; September 30, 2013: $38 million). |
The notes to these unaudited interim financial statements, which are contained in the Third Quarter Report 2014 available on our website are an integral part of these consolidated financial statements.
| CORPORATE OFFICE | TRANSFER AGENTS AND REGISTRARS | ||
| Barrick Gold Corp. | CST Trust Company | ||
| Brookfield Place, TD Canada Trust Tower | P.O. Box 700, Postal Station B | ||
| Suite 3700 | Montreal, Quebec, Canada H3B 3K3 | ||
| 161 Bay Street, P.O. Box 212 | or | ||
| Toronto, Canada M5J 2S1 | American Stock Transfer & Trust Company, LLC | ||
| Tel: (416) 861-9911 Fax: (416) 861-0727 | 6201 - 15 Avenue | ||
| Toll-free throughout North America: 1-800-720-7415 | Brooklyn, NY 11219 | ||
| Email: investor@barrick.com | Tel: 1-800-387-0825 | ||
| Website: www.barrick.com | Toll-free throughout North America | ||
| Fax: 1-888-249-6189 | |||
| SHARES LISTED | Email: inquiries@canstockta.com | ||
| ABX - The New York Stock Exchange | Website: www.canstockta.com | ||
| The Toronto Stock Exchange | |||
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information contained or incorporated by reference in this Third Quarter Report 2014, including any information as to our strategy, projects, plans or future financial or operating performance, constitutes "forward-looking statements". All statements, other than statements of historical fact, are forward-looking statements. The words "believe", "expect", "anticipate", "contemplate", "target", "plan", "intend", "continue", "budget", "estimate", "may", "will", "schedule" and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the company, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to: fluctuations in the spot and forward price of gold, copper or certain other commodities (such as silver, diesel fuel and electricity); changes in national and local government legislation, taxation, controls or regulations and/or changes in the administration of laws, policies and practices, expropriation or nationalization of property and political or economic developments in Canada, the United States, Zambia and other jurisdictions in which the Company does or may carry on business in the future; failure to comply with environmental and health and safety laws and regulations; timing of receipt of, or failure to comply with, necessary permits and approvals; diminishing quantities or grades of reserves; increased costs, delays, suspensions and technical challenges associated with the construction of capital projects; the impact of global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future cash flows; adverse changes in our credit rating; the impact of inflation; operating or technical difficulties in connection with mining or development activities; the speculative nature of mineral exploration and development; risk of loss due to acts of war, terrorism, sabotage and civil disturbances; fluctuations in the currency markets; changes in U.S. dollar interest rates; risks arising from holding derivative instruments; litigation; contests over title to properties, particularly title to undeveloped properties, or over access to water, power and other required infrastructure; business opportunities that may be presented to, or pursued by, the company; our ability to successfully integrate acquisitions or complete divestitures; employee relations; availability and increased costs associated with mining inputs and labor; and the organization of our previously held African gold operations and properties under a separate listed company.
In addition, there are risks and hazards associated with the business of mineral exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion, copper cathode or gold or copper concentrate losses (and the risk of inadequate insurance, or inability to obtain insurance, to cover these risks). Many of these uncertainties and contingencies can affect our actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements are not guarantees of future performance. All of the forward-looking statements made in this Third Quarter Report 2014 are qualified by these cautionary statements. Specific reference is made to the most recent Form 40-F/Annual Information Form on file with the SEC and Canadian provincial securities regulatory authorities for a discussion of some of the factors underlying forward-looking statements.
The company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.
Contact
INVESTOR CONTACT: Amy Schwalm
Vice President, Investor Relations
(416) 307-7422
aschwalm@barrick.com
MEDIA CONTACT: Andy Lloyd
Vice President, Communications
(416) 307-7414
alloyd@barrick.com
