BARRICK REPORTS Q1 2011 FINANCIAL AND OPERATING RESULTS
Barrick Gold Corp. has released its financial results for the first quarter of 2011.
FIRST QUARTER REPORT 2011 Based on IFRS and expressed in US dollars
For a full explanation of results, the Financial Statements and Management Discussion & Analysis, please see the Company's website, www.barrick.com.
Highlights
Financial and Operating Results
-- Q1 reported net earnings rose 22% to $1.0 billion ($1.00 per share) from
$820 million in the prior year period. Q1 adjusted net earnings increased 32% to $1.0 billion ($1.01 per share)(1) from $763 million
($0.78 per share) in Q1 2010, reflecting higher realized prices for both gold and copper and better than expected total gold cash costs. This
results in an annualized return on equity of about 20%(1). Operating
cash flow increased 27% to $1.44 billion from $1.13 billion in the same
prior year period.
-- Q1 gold production of 1.96 million ounces at total cash costs of $437
per ounce and net cash costs of $308 per ounce(1) was ahead of plan
primarily as a result of higher production from the Cortez, Goldstrike
and Veladero mines. The Company is on track to meet its 2011 guidance
of 7.6-8.0 million ounces at total cash costs of $450-$480 per ounce or
net cash costs of $340-$380 per ounce(2), positioning Barrick as one of
the lowest cost senior gold producers.
-- Q1 gold cash margins also continued to benefit from higher gold prices
and better than plan cash costs increasing 32% to $952 per ounce(1) from
$722 per ounce in Q1 2010 and net cash margins rose 32% to $1,081 per
ounce(1)from $821 per ounce in the prior year period. Copper cash
margins increased 33% to $3.00 per pound from $2.25 per pound(1) in the
prior year period on higher copper prices. This significant margin
expansion demonstrates the Company's exceptional leverage to metal
prices.
Corporate Development
-- On April 25, Barrick announced that it had entered into a support
agreement with Equinox Minerals Limited ("Equinox") for Barrick to
acquire, through an all-cash offer of C$8.15 per share, all of the
issued and outstanding common shares of Equinox by way of a friendly
take-over offer (the "Offer"). The acquisition of Equinox would add a
high quality, long-life asset to the Company's portfolio, and is
consistent with the strategy of increasing gold and copper reserves
through exploration and acquisitions. The transaction is expected to be
accretive to earnings and cash flow on a per share basis.
Increasing Gold and Copper Reserves through Exploration and Selective
Acquisitions
-- The 2011 exploration budget has been increased by over 50% from the
prior year spend to $320-$340 million(3) following successful programs
in 2010 that replaced gold reserves and increased measured and indicated
gold resources by 24% and inferred resources by 18%.
Investing in and Developing High Return Projects
-- The recently expanded Cortez mine continued to perform strongly in Q1
with higher than expected production of 366,000 ounces at total cash
costs of $220 per ounce.
-- The Company continued to advance construction of the Pueblo Viejo and
Pascua-Lama projects during the quarter. Once at full capacity, these
two mines are anticipated to contribute about 1.4 million ounces of
annual production at blended average total cash costs of about $150 per
ounce(4) at gold and silver prices of $1,100 per ounce and $16 per
ounce, respectively.
Maximizing the Existing Value of Mines and Properties
-- At the 75%-owned Turquoise Ridge operation in Nevada, a scoping study
was recently completed on the potential to develop a large scale open
pit, which could significantly increase annual production.
-- At the Zaldivar copper mine in Chile, studies are advancing on the
potential to significantly increase copper production by investing in a
process to treat primary sulfide ore.
-- At the Lagunas Norte mine in Peru, the Company is advancing the study of
a sulfide project, which could add substantial ounces to the current
life of mine plan and extend the mine life.
Continually Improve Corporate Social Responsibility (CSR) Practices
-- Barrick has made significant progress on its two new CSR initiatives
announced at the end of 2010. The Company expects to have an external
CSR Advisory Board established by the end of 2011 and also has nominated
an independent Director with a CSR focus for election to the Board of
Directors at the Annual General Meeting.
The remainder is available to Stockwatch subscribers.
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