Mr. Mark Bristow reports
BARRICK REPORTS PRELIMINARY FULL YEAR AND FOURTH QUARTER PRODUCTION RESULTS
Barrick Gold Corp. had preliminary full-year gold production of 4.53 million ounces for 2018, in line with the company's guidance of 4.5 million to 5.0 million ounces, and preliminary full-year gold sales of 4.54 million ounces. Preliminary fourth quarter gold production was 1.26 million ounces, and preliminary fourth quarter gold sales were 1.23 million ounces. The average market price for gold in the fourth quarter was $1,226 per ounce. Fourth quarter gold cost of sales per ounce (1) is expected to be approximately 15 to 17 per cent higher than third quarter results, primarily as a result of a non-cash inventory impairment on Lagunas Norte's long-term stockpiles. Fourth quarter cash costs per ounce (2) are expected to be in line with the third quarter results, and all-in sustaining costs per ounce (2) are expected to be approximately 3 to 5 per cent higher as compared with third quarter results. As the merger between Barrick and Randgold Resources Ltd. was effective on Jan. 1, 2019, these preliminary results exclude production and sales from Randgold (refer to the section herein for Randgold's preliminary results).
All amounts are expressed in U.S. dollars.
Preliminary full-year copper production was 383 million pounds, which were in line with the company's guidance of 345 million to 410 million pounds for 2018, and preliminary full-year copper sales were 382 million pounds. Preliminary copper production in the fourth quarter was 109 million pounds, and preliminary copper sales in the fourth quarter were 109 million pounds. The average market price for copper in the fourth quarter was $2.80 per pound. The company expects quarter-over-quarter increases in its consolidated copper cost of sales per pound (1) of approximately 30 per cent (primarily driven by an adjustment to depreciation), C1 cash costs per pound (2) of approximately 1 to 3 per cent and all-in sustaining costs per pound (2) of approximately 9 to 11 per cent, as compared with third quarter results.
The company now expects its full-year 2018 effective tax rate to be approximately 52 to 56 per cent, an increase from its previous range of 48 to 50 per cent. The increase is primarily due to lower-than-anticipated sales from operations in lower-tax jurisdictions and higher-than-anticipated sales in higher-tax jurisdictions.
Barrick will provide additional discussion and analysis regarding fourth quarter production and sales when the company reports quarterly results before markets open on Feb. 13, 2019, followed by a live presentation by president and chief executive officer Mark Bristow at its offices in Toronto on Feb. 13 at 11 EST, linked to a conference call and webcast. The attached production and sales table includes preliminary gold and copper production and sales results from the company's operations.
PRODUCTION AND SALES
Three months ended Dec. 31, 2018 Year ended Dec. 31, 2018
Production Sales Production Sales
Barrick Nevada (3) 620 595 2,100 2,097
Pueblo Viejo (60%) 166 170 581 590
Lagunas Norte 50 50 245 251
Veladero (50%) 77 74 278 280
Turquoise Ridge (75%) 74 66 268 262
Acacia (63.9%) 84 86 334 333
Kalgoorlie (50%) 58 61 314 320
Porgera (47.5%) 70 72 204 213
Hemlo 52 48 171 168
Golden Sunlight 11 10 32 30
Total gold 1,262 1,232 4,527 4,544
Lumwana 65 65 224 222
Zaldivar (50%) 29 30 104 103
Jabal Sayid (50%) 15 14 55 57
Total copper 109 109 383 382
The following information relates to production and sales of Randgold prior to the merger between Barrick and Randgold, which became effective on Jan. 1, 2019. Randgold production and sales prior to the effective date of the merger are not attributable to Barrick and are included for information purposes only.
Randgold's preliminary full-year group gold production was 1.28 million ounces for 2018, 1 per cent below Randgold's guidance of 1.30 million to 1.35 million ounces as a result of a week of industrial action at Loulo-Gounkoto. Preliminary full-year group gold sales were 1.30 million ounces. Preliminary fourth quarter group gold production was 375,000 ounces, and preliminary fourth quarter group gold sales were 376,000 ounces.
RANDGOLD RESOURCES PRODUCTION AND SALES
Three months ended Dec. 31, 2018 Year ended Dec. 31, 2018
Production Sales Production Sales
Loulo-Gounkoto 192 192 660 667
Morila (40%) 8 7 30 30
Tongon 81 79 230 229
Kibali (45%) 94 98 363 370
Randgold total 375 376 1,283 1,296
* Randgold presents the production and sales figures for Loulo-Gounkoto
and Tongon on a 100-per-cent basis, although it owns 80 per cent and
89.7 per cent, respectively. Randgold presents its 40-per-cent and
45-per-cent equity share of Morila and Kibali, respectively.
The scientific and technical information contained in this news release has been reviewed and approved by: Geoffrey Locke, PEng, manager, metallurgy of Barrick; and Simon Bottoms, mineral resource manager, Africa and Middle East, of Barrick, each a qualified person as defined in National Instrument 43-101 (Standards of Disclosure for Mineral Projects).
Fourth quarter 2018 results
Barrick will release its fourth quarter 2018 results before markets open on Feb. 13, 2019, followed by a live presentation by Mr. Bristow on Feb. 13 at 11 EST, linked to a conference call and webcast.
United States and Canada (toll-free): 1-800-319-4610
United Kingdom (toll-free): 0808-101-2791
International (toll): 1-416-915-3239
The presentation and webcast materials will be available on Barrick's website. The conference call will be available for replay by phone at 1-855-669-9658 (U.S. and Canada toll-free) and 1-604-674-8052 (international), access code 2852.
Cost of sales applicable to gold per ounce is calculated using cost of sales applicable to gold on an attributable basis (removing the non-controlling interest of 40 per cent Pueblo Viejo and 36.1 per cent Acacia from cost of sales), divided by attributable gold ounces. Cost of sales applicable to copper per pound is calculated using cost of sales applicable to copper, including the company's proportionate share of cost of sales attributable to equity method investments (Zaldivar and Jabal Sayid), divided by consolidated copper pounds (including the company's proportionate share of copper pounds from the company's equity method investments). Cost of sales includes depreciation.
Cash costs per ounce and all-in sustaining costs per ounce are non-generally accepted accounting principle financial measures, which are calculated based on the definition published by the World Gold Council (WGC) (a market development organization for the gold industry composed of and financed by 24 gold mining companies from around the world, including Barrick). The WGC is not a regulatory organization. Management uses these measures to monitor the performance of the company's gold mining operations and its ability to generate positive cash flow, both on an individual site basis and an overall company basis.
Cash costs start with the company's cost of sales related to gold production, remove depreciation and the non-controlling interest of cost of sales, and include byproduct credits. All-in sustaining costs start with cash costs and include sustaining capital expenditures, general and administrative costs, mine site exploration and evaluation costs, and reclamation cost accretion and amortization. These additional costs reflect the expenditures made to maintain current production levels.
The company believes that its use of cash costs and all-in sustaining costs will assist analysts, investors and other stakeholders of Barrick in understanding the costs associated with producing gold, understanding the economics of gold mining, assessing its operating performance and also its ability to generate free cash flow from current operations, and generating free cash flow on an overall company basis. Due to the capital-intensive nature of the industry and the long useful lives over which these items are depreciated, there can be a significant timing difference between net earnings calculated in accordance with international financial reporting standards and the amount of free cash flow that is being generated by a mine, and therefore the company believes these measures are useful non-generally accepted accounting principle operating metrics and supplement its IFRS disclosures. These measures are not representative of all of the company's cash expenditures as they do not include income tax payments, interest costs or dividend payments. These measures do not include depreciation or amortization.
Cash costs per ounce and all-in sustaining costs are intended to provide additional information only, do not have standardized definitions under IFRS, and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These measures are not equivalent to net income or cash flow from operations as determined under IFRS. Although the WGC has published a standardized definition, other companies may calculate these measures differently.
C1 cash costs per pound and all-in sustaining costs per pound are non-GAAP financial measures related to the company's copper mine operations. The company believes that C1 cash costs per pound enable investors to better understand the performance of its copper operations in comparison with other copper producers which present results on a similar basis. C1 cash costs per pound exclude royalties and non-routine charges as they are not direct production costs. All-in sustaining costs per pound are similar to the gold all-in sustaining cost metric, and management uses these to better evaluate the costs of copper production. The company believes this measure enables investors to better understand the operating performance of its copper mines as this measure reflects all of the sustaining expenditures incurred to produce copper. All-in sustaining costs per pound include C1 cash costs, corporate general and administrative costs, mine site exploration and evaluation costs, royalties, environmental rehabilitation costs, and writedowns taken on inventory to net realizable value.
Barrick will provide a full reconciliation of the company's final non-GAAP financial measures when the company reports its quarterly results on Feb. 13, 2019.
Includes the company's 60-per-cent equity share of South Arturo.
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