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Barrick Gold Corporation Reports Third Quarter 2017 Results – Net Loss $11 million

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  • Barrick reported a net loss attributable to equity holders (“net loss”) of $11 million ($0.01 per share), and adjusted net earnings of $186 million ($0.16 per share) for the third quarter.
  • The Company generated third quarter revenues of $1.993 billion, net cash provided by operating activities (“operating cash flow”) of $532 million, and free cash flow of $225 million.
  • Gold production in the third quarter was 1.243 million ounces, at a cost of sales applicable to gold of $820 per ounce, and all-in sustaining costs of $772 per ounce.
  • We have reduced our total debt by nearly $1.5 billion year to date, exceeding our target for 2017.
  • We have narrowed full-year gold production guidance to 5.3-5.5 million ounces, at a cost of sales of $790-$810 per ounce, and all-in sustaining costs of $740-$770 per ounce.
  • Feasibility level projects at Cortez Deep South, Goldrush, Turquoise Ridge, and Lagunas Norte continue to advance on schedule and within budget. A prefeasibility study for Pascua-Lama remains underway.
  • Barrick and the Government of Tanzania have reached an agreement on a proposed framework that would redefine Acacia’s relationship with the Government, creating a path for the resolution of outstanding matters impacting Acacia’s operations.

Barrick Gold Corporation today reported third quarter results for the period ending September 30, 2017. Lower revenues, earnings, and cash flow for the quarter reflect lower gold production compared to the prior-year period, as well as the impact of lower sales from Acacia. Despite these factors, a stronger balance sheet and robust cash flow generation allowed us to increase investments in the future of our business, with the ultimate objective of growing free cash flow per share over the long term.

We allocated more capital to our pipeline of low risk, organic projects, located at or near Barrick’s core operations. These projects have the potential to contribute more than one million ounces of annual production to Barrick, beginning in 2020. In addition to organic growth and exploration, the impact of our ongoing investments in digital transformation and innovation, including improvements in safety, productivity, efficiency, and transparency, are expected to accelerate as we broaden the implementation of these projects across our operations.

FINANCIAL HIGHLIGHTS

The Company reported a net loss of $11 million ($0.01 per share) for the third quarter, compared to net earnings of $175 million ($0.15 per share) in the prior-year period. The decrease in net earnings primarily reflects lower gold production and lower gold prices, as well as the impact of Tanzania’s concentrate export ban on Acacia. Net earnings were also impacted by a tax provision of $172 million related to the proposed framework for Acacia’s operations in Tanzania (see page 4 for more details).

In addition, debt extinguishment costs, direct mining costs, exploration and evaluation costs, and depreciation expenses were higher than the prior-year period. These increases were partially offset by higher earnings from equity investees, lower interest costs as a result of debt repayments, and lower tax expense.

Adjusted net earnings1 for the third quarter were $186 million ($0.16 per share), compared to $278 million ($0.24 per share) in the prior-year period. Significant adjusting items (pre-tax and non-controlling interest effects) in the third quarter include:

  • $101 million in losses on debt extinguishment; and
  • $172 million in a tax provision relating to the proposed framework for Acacia operations in Tanzania; partially offset by
  • $93 million in tax effects and non-controlling interest impacts, primarily in relation to the two adjustments discussed above.

Refer to page 50 of Barrick’s third quarter MD&A for a full list of reconciling items between net earnings and adjusted net earnings for the current and prior-year periods.

Operating cash flow was $532 million, compared to $951 million in the third quarter of 2016. Lower operating cash flow primarily reflects lower gold sales, combined with higher cash taxes paid, and higher direct mining costs. Operating cash flow was also impacted by lower cash flows attributable to non-controlling interests, an increase in exploration, evaluation and project expenses, and lower gold prices.

Free cash flow2 for the third quarter was $225 million, compared to $674 million in the third quarter of 2016. Lower free cash flow primarily reflects higher capital expenditures combined with lower operating cash flows. In the third quarter of 2017, capital expenditures on a cash basis were $307 million, compared to $277 million in the third quarter of 2016. This includes a $27 million increase in project capital expenditures, primarily at Barrick Nevada, relating to the development of Crossroads, the Cortez Hills Lower Zone, and the Goldrush project. Minesite sustaining capital expenditures were also higher at Barrick Nevada and Veladero, in line with plans.

RESTORING A STRONG BALANCE SHEET

Achieving and maintaining a strong balance sheet remains a top priority. So far this year, we have reduced our total debt by nearly $1.5 billion, exceeding our target of $1.45 billion for 2017. During the third quarter, we completed the redemption of approximately $731 million of May 2023 notes, and fully repaid the amounts outstanding on our Pueblo Viejo project financing agreement.

Our goal is to reduce our total debt to $5 billion by the end of 2018, using cash flow from operations, and through further portfolio optimization, including potential divestments and the creation of new joint ventures and partnerships. The Company will continue to pursue debt reduction with discipline, taking only those actions that make sense for the business, on terms we consider favorable to our shareholders.

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