TORONTO, ONTARIO--(Marketwired - Oct. 31, 2013) - Barrick Gold Corporation (NYSE:ABX)(TSX:ABX) (Barrick or the "company") today reported third quarter 2013 financial and operating results.
- Strong operating results and cash flow; improved 2013 guidance
- gold production of 1.85 million ounces at all-in sustaining costs (AISC) of $916 per ounce
- copper production of 139 million pounds at C3 fully allocated costs of $2.15 per pound
- narrowed the range and lowered top end of operating cost guidance for gold; improved copper guidance on Lumwana turnaround
- adjusted net earnings of $0.58 billion ($0.58 per share) and adjusted operating cash flow of $1.30 billion
- Suspension of construction activities at the Pascua-Lama project will further reduce 2014 capital costs by up to $1.0 billion
- Targeting annual cost savings of $500 million from a flatter operating model and other initiatives
- Portfolio optimization progress with sale of Barrick Energy, Yilgarn South mines, and Pierina closure
"Significant cost and operational improvements achieved this year, including previously announced reductions of $2.0 billion from budgeted 2013 capital and costs, have translated into another quarter of strong results," said Jamie Sokalsky, Barrick's President and CEO. "We continue to make excellent progress at Lumwana and are evaluating a number of other opportunities to improve performance further. We have also targeted additional annual savings of approximately $500 million through a simpler, more efficient operating model and other initiatives, demonstrating our commitment to continued cost reductions. The suspension of Pascua-Lama will also significantly improve our near term cash flows."
PASCUA-LAMA PROJECT SUSPENSION
Barrick has decided to temporarily suspend construction activities at Pascua-Lama, except those required for environmental protection and regulatory compliance. This decision will postpone and reduce near term cash outlays, and allows the company to proceed with development at the appropriate time under a more effective, phased approach. The decision to re-start will depend on improved project economics such as go-forward costs, the outlook for metal prices, and reduced uncertainty associated with legal and other regulatory requirements.
"We have determined that the prudent course - at this stage - is to suspend the project, but naturally we will maintain our option to resume construction and finish the project when improvements to its current challenges have been attained," Mr. Sokalsky said. "As a result of our previous decision to slow down and re-sequence construction, which resulted in significant demobilization over the last few months, we are in a much better position to implement this temporary suspension quickly and efficiently, with many ramp-down activities already underway. Our previously lowered capital cost guidance for 2014 is now expected to be further reduced by up to $1.0 billion while we continue to address all our environmental and social obligations. This decision is consistent with our disciplined capital allocation framework announced last year."
The ramp-down will be carried out in a way that allows for an efficient and effective re-start when conditions warrant. In the meantime, the company will update and refine capital cost estimates and stage the project's remaining development into distinct phases with specific work programs, budgets and objectives. This staged approach will also facilitate more efficient planning and execution, more effective capital deployment, and improved cost control. The company will also continue to explore further opportunities to improve the project's risk-adjusted returns, such as strategic partnerships and royalty or other income streaming agreements. Most importantly, Barrick's decision will maintain the option value of this major world class resource and its potential to generate significant cash flows during its 25 year mine life and beyond.
FLATTER OPERATING MODEL AND ADDITIONAL COST REDUCTION INITIATIVES
Barrick is targeting $500 million of annual cost savings related to: job reductions from a company-wide review launched earlier this year, now largely complete, and through a new operating model (~$150 million), a program to reduce procurement costs (~$250 million) and other initiatives (~$100 million). In addition, African Barrick Gold (ABG) has targeted annual savings of $185 million.
Barrick's commitment to maximizing risk-adjusted returns and free cash flow by focusing on its most profitable production requires a more streamlined operating model. The new model provides a more efficient and simpler decision-making structure that better supports the company's goal of cost reduction. The new model will eliminate the Regional Business Unit structure and will be in place by early next year. As a result of the change in operating structure, the company is eliminating approximately 1,850 positions, 85 percent of which have been achieved to date.
Under the new structure, Cortez, Goldstrike, Pueblo Viejo, Lagunas Norte and Veladero will report directly to the Chief Operating Officer (COO), as will the head of Copper operations. The balance of the mines will report to Operating Heads in North America and Australia Pacific and in turn, to the COO. The new operating model allows mine managers to focus more sharply on the core business of mining, brings senior management closer to the mines, and creates a flatter organization with stronger accountability.
BARRICK'S HIGH QUALITY ASSETS PROVIDE FLEXIBILITY IN A LOWER METAL PRICE ENVIRONMENT
As part of Barrick's increased focus on disciplined capital allocation adopted in 2012, the company has aggressively reduced costs, improved cash flow and is well underway in executing its portfolio optimization plan. During the third quarter, the company has made further progress to divest non-core assets and improve cash flow:
| ASSET | SECOND QUARTER 2013 | THIRD QUARTER 2013 PROGRESS | ||
| Bald Mountain | Mine plan changes to reduce pits and focus on the most profitable ounces, retain option to access other ore in future | Implementing mine plan changes | ||
| Yilgarn South | Optimize mine plan and/or divest | Sold | ||
| Plutonic | Optimize mine plan and/or divest | Sale process underway for Plutonic and Kanowna | ||
| Hemlo | Defer open pit expansion, optimize underground mine plan | Deferred open pit expansion, evaluating changes to underground mine plan | ||
| Lumwana | Completed scenario planning; significant performance improvements by implementing mine plan changes to reduce stripping | Sustained operating improvements, evaluating further plant efficiencies | ||
| Pierina | Assessing closure options | Initiated closure | ||
| African Barrick Gold (73.9%) | Finalizing detailed operational review to optimize mine plans and improve operations | Implementing operational review and targeting $185 million of annual savings; improved 2013 operating outlook, positive grade reconciliations and changes to mine plan at North Mara | ||
| Round Mountain (50%) Marigold (33%) |
Working with joint venture partners to optimize mine plans | Ongoing | ||
| Porgera | Evaluate mine plan changes and explore other alternatives | Ongoing |
The company is developing new mine plans at $1,100 per ounce at its mines. The combination of: i) selling non-core assets; ii) changing mine plans to focus on more profitable production; and, iii) calculating reserves with a lower gold price assumption will reduce year-end reserves and future production. Where possible, we will nevertheless maintain the option to access the metal in the future once gold prices recover.
FINANCIAL DISCUSSION
Third quarter net earnings and adjusted net earnings were $0.17 billion ($0.17 per share) and $0.58 billion ($0.58 per share)(1), respectively. These results compare to net earnings and adjusted net earnings of $0.65 billion ($0.65 per share) and $0.88 billion ($0.88 per share), respectively, in the same prior year period. Net earnings reflect the impact of lower realized gold and copper prices, higher interest expense and higher income tax expense, partially offset by higher copper sales. Significant adjusting items (net of tax and non-controlling interest effects) for the quarter include:
- $280 million in income tax expense at Pueblo Viejo, primarily due to the recognition of an increase in the deferred tax liability which will be drawn down over the life of the mine, as well as an acceleration of current taxes payable for 2012 and 2013 related to the enactment of the revised Special Lease Agreement (SLA);
- $47 million increase in the rehabilitation provision for Pierina as a result of its accelerated closure; and,
- $40 million in unrealized foreign currency translation losses.
Third quarter 2013 operating cash flow of $1.23 billion compares to $1.85 billion in the third quarter of 2012 and reflects the lower net earnings, partially offset by a decrease in income tax payments. Adjusted operating cash flow of $1.30 billion(1) compares to $1.40 billion in the same prior year period and removes the impact of the settlement of foreign currency and commodity derivative contracts. Realized gold and copper prices for the quarter were $1,323 per ounce(1) and $3.40 per pound(1), respectively, compared to the spot averages of $1,326 per ounce and $3.21 per pound.
LIQUIDITY AND FINANCIAL FLEXIBILITY
At September 30, Barrick had cash and equivalents of $2.3 billion and $4.0 billion available under its credit facility. The company generated operating cash flow of $3.22 billion in the first nine months of 2013. Barrick has approximately $1.3 billion of cumulative debt maturing through to the end of 2015.
In the third quarter, Barrick Energy was sold for total consideration of $435 million, including cash of $387 million plus a future royalty valued at $48 million. Barrick also completed the sale of the Yilgarn South assets to Gold Fields Limited for total consideration of $266 million, consisting of $135 million in cash and $131 million in Gold Fields Limited shares. The company continues to actively pursue other portfolio optimization opportunities, including the divestiture of non-core assets.
CORPORATE GOVERNANCE
Since the company's 2013 annual meeting, various directors of Barrick have engaged in discussions with Barrick's institutional shareholders to understand their perspectives on Barrick's compensation practices and governance arrangements. The Board is addressing the issues that have been raised with our directors, including the modification of the company's executive compensation arrangements and the rejuvenation of the Board through a combination of departures from the Board and the addition of independent directors. The company's intention is to update the market before year end on these initiatives.
OPERATING RESULTS AND OUTLOOK DISCUSSION
Third quarter 2013 gold production was 1.85 million ounces at adjusted operating costs and AISC of $573 per ounce(2) and $916 per ounce(2), respectively. Adjusting for the sale of the Yilgarn South mines, full year gold production is now expected to be at the low end of the original 7.0-7.4 million ounce guidance range. All-in sustaining costs are expected to be within the recently reduced guidance range of $900-$975 per ounce and the company has lowered the top end of its adjusted operating cost guidance to $575-$600 per ounce.
Third quarter copper production was 139 million pounds at C1 cash costs of $1.69 per pound(2) and C3 fully allocated costs of $2.15 per pound(2). The Lumwana copper mine continues to benefit from changes made to the mine plan in the second quarter and other business improvement initiatives to decrease costs and maximize cash flow. Due to the mine's improved operating performance, Barrick has increased full year company-wide copper production guidance to 520-550 million pounds. Full year C1 cash cost and C3 fully allocated cost guidance has been reduced to $1.90-$2.00 per pound and $2.40-$2.60 per pound, respectively.
| Gold | Q3 2013 | Current Guidance |
Original Guidance* |
| Production (000s of ounces) | 1,845 | 7,000-7,400 | 7,000-7,400 |
| AISC ($ per ounce) | 916 | 900-975 | 1,000-1,100 |
| Adjusted operating costs ($ per ounce) | 573 | 575-600 | 610-660 |
| Copper | |||
| Production (millions of pounds) | 139 | 520-550 | 480-540 |
| C1 cash costs ($ per pound) | 1.69 | 1.90-2.00 | 2.10-2.30 |
| C3 fully allocated costs ($ per pound) | 2.15 | 2.40-2.60 | 2.60-2.85 |
| *included Yilgarn South |
North America
North America produced 0.90 million ounces at AISC of $816 per ounce. Barrick's 60 percent share of production from the Pueblo Viejo mine was 0.11 million ounces at AISC of $770 per ounce. Barrick's share of 2013 production from Pueblo Viejo is anticipated to be about 500,000 ounces at AISC of $700-$750 per ounce, primarily due to a slower than expected ramp-up. Major modifications to the autoclaves have been completed and all four autoclaves are online after being individually tested to design capacity. The new 215 megawatt power plant was commissioned on schedule in the third quarter. The mine is now expected to reach full capacity in the first half of 2014 following completion of de-bottlenecking modifications to the lime circuit. During the quarter, proposed amendments to the Pueblo Viejo SLA were approved by the Government of the Dominican Republic and Pueblo Viejo Dominicana Corporation (PVDC) and were effective as at the quarter-end.
The Cortez mine produced 0.33 million ounces at AISC of $470 per ounce on lower grades and recoveries. Production at Cortez is expected to decline in the fourth quarter due to lower grades as anticipated in the mine plan. Goldstrike produced 0.23 million ounces at AISC of $874 per ounce, reflecting higher open pit grades following a stripping phase in the first half of the year. The autoclave facility is undergoing modifications for the thiosulphate project, which will enable about 4.0 million ounces to be brought forward in the mine plan. Total project costs are now expected to be about $585 million due to increased steel requirements and higher contractor costs. The company expects first production from this project in the fourth quarter of 2014 and average annual production of 350,000-450,000 ounces over its first full five years of operation. Full year production for North America is expected to be within the original guidance range of 3.55-3.70 million ounces. Full year AISC are anticipated to be at the high end of the previous guidance range of $750-$800 per ounce, primarily on higher costs at Pueblo Viejo due to lower silver by-product credits as a result of the slower than expected ramp-up.
South America
South America produced 0.33 million ounces at AISC of $831 per ounce. The Veladero mine contributed 0.15 million ounces at AISC of $874 per ounce, reflecting lower grades and silver credits compared to the first half of the year. Lagunas Norte produced 0.14 million ounces at AISC of $696 per ounce. Production at Lagunas Norte is expected to increase in the fourth quarter on higher grades and tons as anticipated in the mine plan and as a result of the newly commissioned carbon-in-column plant, which allows for greater solution flow to the expanded leach pad. The company has decided to initiate closure of the Pierina mine in Peru.
Full year production for South America is now expected to be at the high end of the original guidance range of 1.25-1.35 million ounces. Full year AISC are anticipated to be at the low end of the original guidance range of $875-$925 per ounce.
Australia Pacific
Australia Pacific produced 0.50 million ounces at AISC of $945 per ounce. The Porgera mine contributed 0.12 million ounces at AISC of $1,187 per ounce. Due to the sale of Yilgarn South, full year production for Australia Pacific is now expected to be at the low end of the original 1.70-1.85 million ounce guidance range. Full year AISC are anticipated to be at the low end of the previous guidance range of $1,100-$1,200 per ounce.
African Barrick Gold plc (ABG)
Third quarter attributable production from ABG was 0.12 million ounces at AISC of $1,275 per ounce. Barrick's share of 2013 production from ABG is expected to exceed the top end of the original guidance range of 0.40-0.45 million ounces. Full year AISC are expected to be below the low end of the original guidance range of $1,550-$1,600 per ounce. The improved outlook reflects the implementation of ABG's operational review.
Global Copper
Copper production in the third quarter was 139 million pounds at C1 cash costs of $1.69 per pound and C3 fully allocated costs of $2.15 per pound. The Zaldívar mine produced 68 million pounds at C1 cash costs of $1.63 per pound. Lumwana contributed 71 million pounds at C1 cash costs of $1.75 per pound. The mine plan at Lumwana was adjusted in the second quarter to reduce waste stripping volumes earlier than previously planned. This enabled the termination of a large mining contractor which has contributed to significant cost savings and focused site efforts on improving the owner mining fleet productivity. Elimination of the maintenance contractor associated with the transition to in-house maintenance and reductions to consumables have also contributed to the mine's improved performance.
Utilizing option collar hedging strategies, the company has protected the downside on approximately half of its expected remaining 2013 copper production at an average floor price of $3.50 per pound and can participate on the same amount up to an average price of $4.25 per pound(3). In addition, it has protected the downside on approximately 40 percent of expected 2014 copper production at an average floor price of $3.00 per pound and can participate on the same amount up to an average of $3.75 per pound(4).
Financial results are 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.
| (1) | Adjusted net earnings, adjusted net earnings per share, adjusted operating cash flow, realized gold price per ounce and realized copper price per pound are non-GAAP financial performance measures with no standardized definition under IFRS. See pages 44-49 of Barrick's Third Quarter 2013 Report. |
| (2) | Adjusted operating cost per ounce, all-in sustaining cost per ounce, C1 cash cost per pound and C3 fully allocated cost per pound are non-GAAP financial performance measures with no standardized definition under IFRS. See pages 44-49 of Barrick's Third Quarter 2013 Report. |
| (3) | The realized price on all 2013 copper production is expected to be reduced by approximately $0.04 per pound as a result of the net premium paid on option hedging strategies. Our remaining copper production is subject to market prices. |
| (4) | The realized price on all 2014 copper production is expected to be reduced by approximately $0.02 per pound as a result of the net premium paid on option hedging strategies. Our remaining copper production is subject to market prices. |
| Key Statistics | |||||||||
| Barrick Gold Corporation | Three months ended | Nine months ended | |||||||
| (in United States dollars) | September 30, | September 30, | |||||||
| (Unaudited) | 2013 | 2012 (restated)7 | 2013 | 2012 (restated)7 | |||||
| Operating Results | |||||||||
| Gold production (thousands of ounces)1 | 1,845 | 1,779 | 5,453 | 5,402 | |||||
| Gold sold (thousands of ounces)1 | 1,783 | 1,792 | 5,345 | 5,265 | |||||
| Per ounce data | |||||||||
| Average spot gold price | $ | 1,326 | $ | 1,652 | $ | 1,456 | $ | 1,652 | |
| Average realized gold price2 | 1,323 | 1,655 | 1,453 | 1,652 | |||||
| Adjusted operating costs2 | 573 | 575 | 564 | 570 | |||||
| All-in sustaining costs2 | 916 | 1,010 | 919 | 998 | |||||
| All-in costs2 | 1,184 | 1,412 | 1,269 | 1,390 | |||||
| Adjusted operating costs (on a co-product basis) 2 | 593 | 591 | 588 | 587 | |||||
| All-in sustaining costs (on a co-product basis)2 | 936 | 1,026 | 943 | 1,015 | |||||
| All-in costs (on a co-product basis)2 | 1,204 | 1,428 | 1,293 | 1,407 | |||||
| Copper production (millions of pounds) | 139 | 112 | 400 | 338 | |||||
| Copper sold (millions of pounds) | 135 | 84 | 385 | 318 | |||||
| Per pound data | |||||||||
| Average spot copper price | $ | 3.21 | $ | 3.50 | $ | 3.35 | $ | 3.61 | |
| Average realized copper price2 | 3.40 | 3.52 | 3.41 | 3.59 | |||||
| C1 cash costs2 | 1.69 | 2.01 | 1.94 | 2.09 | |||||
| Depreciation3 | 0.29 | 0.70 | 0.36 | 0.57 | |||||
| Other4 | 0.17 | 0.34 | 0.15 | 0.15 | |||||
| C3 fully allocated costs2 | 2.15 | 3.05 | 2.45 | 2.81 | |||||
| Financial Results (millions) | |||||||||
| Revenues | $ | 2,985 | $ | 3,399 | $ | 9,585 | $ | 10,245 | |
| Net earnings (loss)5 | 172 | 649 | (7,536) | 2,475 | |||||
| Adjusted net earnings2 | 577 | 880 | 2,163 | 2,797 | |||||
| Operating cash flow | 1,231 | 1,845 | 3,223 | 4,138 | |||||
| Adjusted operating cash flow2 | 1,300 | 1,395 | 3,274 | 3,790 | |||||
| Per Share Data (dollars) | |||||||||
| Net earnings (loss) (basic) | 0.17 | 0.65 | (7.53) | 2.47 | |||||
| Adjusted net earnings (basic)2 | 0.58 | 0.88 | 2.16 | 2.80 | |||||
| Net earnings (loss) (diluted) | 0.17 | 0.65 | (7.53) | 2.47 | |||||
| Weighted average basic common shares (millions) | 1,001 | 1,001 | 1,001 | 1,001 | |||||
| Weighted average diluted common shares (millions)6 | 1,001 | 1,001 | 1,001 | 1,001 | |||||
| As at | As at | ||||||||
| September 30, | December 31, | ||||||||
| 2013 | 2012 (restated)7 | ||||||||
| Financial Position (millions) | |||||||||
| Cash and equivalents | $ | 2,283 | $ | 2,097 | |||||
| Non-cash working capital | 3,267 | 2,884 | |||||||
| 1 | Production includes our equity share of gold production at Highland Gold up to April 26, 2012, the effective date of our sale of Highland Gold. Production also includes African Barrick Gold ("ABG") on a 73.9% basis and Pueblo Viejo on a 60% basis, both of which reflect our equity share of production. Sales includes 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 ounces of gold sold or 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 represents net income attributable to the equity holders of the Company. |
| 6 | Fully diluted includes dilutive effect of stock options. |
| 7 | Balances related to 2012 have been restated to reflect the impact of the adoption of new accounting pronouncements. See note 2B of the interim consolidated financial statements. |
| Production and Cost Summary | ||||||||||||||||
| Gold Production (attributable ounces) (000's) | All-in sustaining costs4($/oz) | |||||||||||||||
| Three months ended | Nine months ended | Three months ended | Nine months ended | |||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| (Unaudited) | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||
| Gold | ||||||||||||||||
| North America | 901 | 795 | 2,701 | 2,537 | $816 | $914 | $798 | $870 | ||||||||
| South America | 325 | 394 | 991 | 1,172 | 831 | 724 | 769 | 750 | ||||||||
| Australia Pacific | 497 | 481 | 1,409 | 1,352 | 945 | 1,131 | 1,023 | 1,145 | ||||||||
| African Barrick Gold1 | 122 | 109 | 352 | 329 | 1,275 | 1,709 | 1,429 | 1,563 | ||||||||
| Other2 | - | - | - | 12 | - | - | - | - | ||||||||
| Total | 1,845 | 1,779 | 5,453 | 5,402 | $916 | $1,010 | $919 | $998 | ||||||||
| Copper Production (attributable pounds) (millions) | C1 Cash Costs4 ($/lb) | |||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| (Unaudited) | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 (restated) 6 | 2013 | 2012 (restated) 6 | ||||||||||
| Total | 139 | 112 | 400 | 338 | $ | 1.69 | $ | 2.01 | $ | 1.94 | $ | 2.09 | ||||||
| Total Gold Production Costs ($/oz) | ||||||||||||
| Three months ended | Nine months ended | |||||||||||
| September 30, | September 30, | |||||||||||
| (Unaudited) | 2013 | 2012 (restated) 6 | 2013 | 2012 (restated) 6 | ||||||||
| Direct mining costs before impact of hedges at market foreign exchange rates | $ | 605 | $ | 600 | $ | 607 | $ | 604 | ||||
| Gains realized on currency hedge and commodity hedge/economic hedge contracts | (39) | (46) | (44) | (48) | ||||||||
| Other3 | (4) | (11) | (11) | (12) | ||||||||
| By-product credits | (20) | (16) | (24) | (17) | ||||||||
| Royalties | 31 | 48 | 36 | 43 | ||||||||
| Adjusted operating costs4 | 573 | 575 | 564 | 570 | ||||||||
| Depreciation | 208 | 189 | 205 | 187 | ||||||||
| Other3 | 4 | 11 | 11 | 12 | ||||||||
| Total production costs | $ | 785 | $ | 775 | $ | 780 | $ | 769 | ||||
| Adjusted operating costs4 | $ | 573 | $ | 575 | $ | 564 | $ | 570 | ||||
| General & administrative costs | 52 | 62 | 44 | 57 | ||||||||
| Rehabilitation - accretion and amortization | 16 | 18 | 19 | 18 | ||||||||
| Mine on-site exploration and evaluation costs | 10 | 17 | 8 | 15 | ||||||||
| Mine development expenditures | 157 | 165 | 162 | 165 | ||||||||
| Sustaining capital expenditures | 108 | 173 | 122 | 173 | ||||||||
| All-in sustaining costs4 | $ | 916 | $ | 1,010 | $ | 919 | $ | 998 | ||||
| All-in costs4 | $ | 1,184 | $ | 1,412 | $ | 1,269 | $ | 1,390 | ||||
| Total Copper Production Costs ($/lb) | |||||||||||
| Three months ended | Nine months ended | ||||||||||
| September 30, | September 30, | ||||||||||
| (Unaudited) | 2013 | 2012 (restated) 6 | 2013 | 2012 (restated) 6 | |||||||
| C1 cash costs4 | $ | 1.69 | $ | 2.01 | $ | 1.94 | $ | 2.09 | |||
| Depreciation | 0.29 | 0.70 | 0.36 | 0.57 | |||||||
| Other5 | 0.17 | 0.34 | 0.15 | 0.15 | |||||||
| C3 fully allocated costs4 | $ | 2.15 | $ | 3.05 | $ | 2.45 | $ | 2.81 | |||
| 1 | Figures relating to African Barrick Gold are presented on a 73.9% basis, which reflects our equity share of production. |
| 2 | Includes our equity share of gold production at Highland Gold up to April 26, 2012, the effective date of our sale of Highland Gold. |
| 3 | Represents the Barrick Energy gross margin divided by equity ounces of gold sold. |
| 4 | 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. |
| 5 | 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. |
| 6 | Balances related to 2012 have been restated to reflect the impact of the adoption of new accounting pronouncements. See note 2B of the interim consolidated financial statements. |
| Consolidated Statements of Income | ||||||||||||
| Barrick Gold Corporation (in millions of United States dollars, except per share data) (Unaudited) | | Three months ended September 30, | | | Nine months ended September 30, | |||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||
| (restated - | (restated - | |||||||||||
| note 2B) | note 2B) | |||||||||||
| Revenue (notes 5 and 6) | $ | 2,985 | $ | 3,399 | $ 9,585 | $ | 10,245 | |||||
| Costs and expenses (income) | ||||||||||||
| Cost of sales (notes 5 and 7) | 1,788 | 1,733 | 5,430 | 5,172 | ||||||||
| Corporate administration | 46 | 45 | 134 | 150 | ||||||||
| Exploration and evaluation (note 8) | 48 | 95 | 154 | 251 | ||||||||
| Other expense (income) (note 10A) | 223 | 144 | 569 | 342 | ||||||||
| Impairment charges (note 10B) | 13 | 152 | 9,345 | 274 | ||||||||
| Loss from equity investees | - | 2 | - | 8 | ||||||||
| Loss (gain) on non-hedge derivatives (note 18D) | (19) | 75 | (74) | 75 | ||||||||
| Income (loss) before finance items and income taxes | 886 | 1,153 | (5,973) | 3,973 | ||||||||
| Finance items | ||||||||||||
| Finance income | 2 | 3 | 7 | 9 | ||||||||
| Finance costs (note 11) | (122) | (33) | (391) | (130) | ||||||||
| Income (loss) from continuing operations before income taxes | 766 | 1,123 | (6,357) | 3,852 | ||||||||
| Income tax expense (note 12) | (748) | (461) | (968) | (1,334) | ||||||||
| Income (loss) from continuing operations | 18 | 662 | (7,325) | 2,518 | ||||||||
| Loss from discontinued operations (note 4B) | (9) | (10) | (506) | (24) | ||||||||
| Net income (loss) | $ | 9 | $ | 652 | $ | (7,831) | $ | 2,494 | ||||
| Attributable to: | ||||||||||||
| Equity holders of Barrick Gold Corporation | $ | 172 | $ | 649 | $ | (7,536) | $ | 2,475 | ||||
| Non-controlling interests (note 21) | $ | (163) | $ | 3 | $ | (295) | $ | 19 | ||||
| Earnings per share data attributable to the equity holders of Barrick Gold Corporation (note 9) | ||||||||||||
| Income (loss) from continuing operations | ||||||||||||
| Basic | $ | 0.18 | $ | 0.66 | $ | (7.02) | $ | 2.50 | ||||
| Diluted | $ | 0.18 | $ | 0.66 | $ | (7.02) | $ | 2.50 | ||||
| Loss from discontinued operations | ||||||||||||
| Basic | $ | (0.01) | $ | (0.01) | $ | (0.51) | $ | (0.03) | ||||
| Diluted | $ | (0.01) | $ | (0.01) | $ | (0.51) | $ | (0.03) | ||||
| Net income (loss) | ||||||||||||
| Basic | $ | 0.17 | $ | 0.65 | $ | (7.53) | $ | 2.47 | ||||
| Diluted | $ | 0.17 | $ | 0.65 | $ | (7.53) | $ | 2.47 | ||||
| The notes to these unaudited interim financial statements, which are contained in the Third Quarter Report 2013 available on our website are an integral part of these consolidated financial statements. |
| Consolidated Statements of Comprehensive Income | ||||||||||||
| Barrick Gold Corporation (in millions of United States dollars) (Unaudited) | | Three months ended September 30, | | | Nine months ended September 30, | |||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||
| (restated - | (restated - | |||||||||||
| note 2B) | note 2B) | |||||||||||
| Net income (loss) | $ | 9 | $ | 652 | $ | (7,831) | $ | 2,494 | ||||
| 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, $2, $4 and $1 | 4 | 13 | (22) | (24) | ||||||||
| Realized (gains) losses and impairments on AFS financial securities, net of tax $nil, $nil, $2 and $2 | 2 | 1 | 13 | 29 | ||||||||
| Unrealized gains (losses) on derivatives designated as cash flow hedges, net of tax $8, $16, $7 and $14 | 4 | 82 | (51) | 141 | ||||||||
| Realized gains on derivatives designated as cash flow hedges, net of tax $20, $25, $61 and $70 | (60) | (81) | (242) | (240) | ||||||||
| Currency translation adjustments, net of tax $nil, $nil, $nil and $nil | 24 | 36 | (74) | 37 | ||||||||
| Total other comprehensive income (loss) | (26) | 51 | (376) | (57) | ||||||||
| Total comprehensive income (loss) | $ | (17) | $ | 703 | $ | (8,207) | $ | 2,437 | ||||
| Attributable to: | ||||||||||||
| Equity holders of Barrick Gold Corporation | ||||||||||||
| Continuing operations | $ | 135 | $ | 672 | $ | (7,375) | $ | 2,393 | ||||
| Discontinued operations | $ | 11 | $ | 28 | $ | (537) | $ | 25 | ||||
| Non-controlling interests | $ | (163) | $ | 3 | $ | (295) | $ | 19 | ||||
| The notes to these unaudited interim financial statements, which are contained in the Third Quarter Report 2013 available on our website are an integral part of these consolidated financial statements. |
| Consolidated Statements of Cash Flow | ||||||||||||
| Barrick Gold Corporation (in millions of United States dollars) (Unaudited) | | Three months ended September 30, | | | Nine months ended September 30, | |||||||
| 2013 | 2012 (restated - | 2013 | 2012 (restated - | |||||||||
| note 2B) | note 2B) | |||||||||||
| OPERATING ACTIVITIES | ||||||||||||
| Net income (loss) from continuing operations | $ | 18 | $ | 662 | $ | (7,325) | $ | 2,518 | ||||
| Adjusted for the following items: | ||||||||||||
| Depreciation | 441 | 398 | 1,290 | 1,159 | ||||||||
| Finance costs (excludes accretion) | 105 | 22 | 341 | 90 | ||||||||
| Impairment charges (note 10B) | 13 | 152 | 9,345 | 274 | ||||||||
| Income tax expense (note 12) | 748 | 461 | 968 | 1,334 | ||||||||
| Increase in inventory | (47) | (228) | (280) | (410) | ||||||||
| Proceeds from settlement of hedge contracts | - | 450 | 219 | 450 | ||||||||
| (Gain) loss on non-hedge derivatives | (19) | 75 | (74) | 75 | ||||||||
| (Gain) loss on sale of long-lived assets/investments | (16) | 2 | (25) | (18) | ||||||||
| Other operating activities (note 13A) | 166 | 83 | (266) | (208) | ||||||||
| Operating cash flows before interest and income taxes | 1,409 | 2,077 | 4,193 | 5,264 | ||||||||
| Interest paid | (36) | (6) | (253) | (73) | ||||||||
| Income taxes paid | (141) | (250) | (767) | (1,217) | ||||||||
| Net cash provided by operating activities from continuing operations | 1,232 | 1,821 | 3,173 | 3,974 | ||||||||
| Net cash (used in) provided by operating activities from discontinued operations | (1) | 24 | 50 | 164 | ||||||||
| Net cash provided by operating activities | 1,231 | 1,845 | 3,223 | 4,138 | ||||||||
| INVESTING ACTIVITIES | ||||||||||||
| Property, plant and equipment | ||||||||||||
| Capital expenditures (note 5) | (1,205) | (1,659) | (4,136) | (4,734) | ||||||||
| Sales proceeds | - | 5 | 3 | 14 | ||||||||
| Acquisitions | - | - | - | (15) | ||||||||
| Divestitures | 417 | - | 417 | - | ||||||||
| Investments | ||||||||||||
| Sales | - | 2 | 18 | 169 | ||||||||
| Other investing activities (note 13B) | (86) | (45) | (217) | (210) | ||||||||
| Net cash used in investing activities from continuing operations | (874) | (1,697) | (3,915) | (4,776) | ||||||||
| Net cash used in investing activities from discontinued operations | (7) | (22) | (64) | (95) | ||||||||
| Net cash used in investing activities | (881) | (1,719) | (3,979) | (4,871) | ||||||||
| FINANCING ACTIVITIES | ||||||||||||
| Proceeds on exercise of stock options | - | 1 | 1 | 6 | ||||||||
| Long-term debt | ||||||||||||
| Proceeds | 124 | - | 5,234 | 2,000 | ||||||||
| Repayments | (565) | - | (3,836) | (1,377) | ||||||||
| Dividends | (50) | (200) | (450) | (550) | ||||||||
| Funding from non-controlling interests | 2 | 132 | 34 | 390 | ||||||||
| Deposit on silver sale agreement | - | 137 | - | 137 | ||||||||
| Other financing activities (note 13C) | (7) | - | (29) | (25) | ||||||||
| Net cash (used in) provided by financing activities from continuing operations | (496) | 70 | 954 | 581 | ||||||||
| Net cash used in financing activities from discontinued operations | - | - | - | (69) | ||||||||
| Net cash (used in) provided by financing activities | (496) | 70 | 954 | 512 | ||||||||
| Effect of exchange rate changes on cash and equivalents | (1) | 4 | (12) | 8 | ||||||||
| Net increase (decrease) in cash and equivalents | (147) | 200 | 186 | (213) | ||||||||
| Cash and equivalents at beginning of period (note 18A) | 2,430 | 2,336 | 2,097 | 2,749 | ||||||||
| Cash and equivalents at end of period (note 18A) | $ | 2,283 | $ | 2,536 | $ | 2,283 | $ | 2,536 | ||||
| The notes to these unaudited interim financial statements, which are contained in the Third Quarter Report 2013 available on our website are an integral part of these consolidated financial statements. |
| Consolidated Balance Sheets | |||||||||
| Barrick Gold Corporation | |||||||||
| (in millions of United States dollars) (Unaudited) | As at September 30, | As at December 31, | As at January 1, | ||||||
| 2013 | 2012 (restated - note 2B) | 2012 (restated - note 2B) | |||||||
| ASSETS | |||||||||
| Current assets | |||||||||
| Cash and equivalents (note 18A) | $ | 2,283 | $ | 2,097 | $ | 2,749 | |||
| Accounts receivable | 430 | 449 | 426 | ||||||
| Inventories (note 14) | 2,776 | 2,585 | 2,498 | ||||||
| Other current assets | 492 | 626 | 876 | ||||||
| Total current assets | 5,981 | 5,757 | 6,549 | ||||||
| Non-current assets | |||||||||
| Equity in investees | 24 | 20 | 341 | ||||||
| Other investments | 167 | 78 | 161 | ||||||
| Property, plant and equipment (note 15) | 23,529 | 29,277 | 29,076 | ||||||
| Goodwill (note 16) | 6,415 | 8,837 | 9,626 | ||||||
| Intangible assets | 323 | 453 | 569 | ||||||
| Deferred income tax assets | 541 | 437 | 409 | ||||||
| Non-current portion of inventory (note 14) | 1,594 | 1,555 | 1,153 | ||||||
| Other assets | 1,263 | 1,064 | 1,002 | ||||||
| Total assets | $ | 39,837 | $ | 47,478 | $ | 48,886 | |||
| LIABILITIES AND EQUITY | |||||||||
| Current liabilities | |||||||||
| Accounts payable | $ | 1,847 | $ | 2,267 | $ | 2,085 | |||
| Debt (note 18B) | 861 | 1,848 | 196 | ||||||
| Current income tax liabilities | 358 | 41 | 306 | ||||||
| Other current liabilities | 287 | 261 | 326 | ||||||
| Total current liabilities | 3,353 | 4,417 | 2,913 | ||||||
| Non-current liabilities | |||||||||
| Debt (note 18B) | 14,571 | 12,095 | 13,173 | ||||||
| Provisions | 2,260 | 2,812 | 2,326 | ||||||
| Deferred income tax liabilities | 2,731 | 2,668 | 4,231 | ||||||
| Other liabilities | 914 | 850 | 689 | ||||||
| Total liabilities | 23,829 | 22,842 | 23,332 | ||||||
| Equity | |||||||||
| Capital stock (note 20) | 17,935 | 17,926 | 17,892 | ||||||
| Retained earnings (deficit) | (4,717) | 3,269 | 4,562 | ||||||
| Accumulated other comprehensive income | 87 | 463 | 595 | ||||||
| Other | 314 | 314 | 314 | ||||||
| Total equity attributable to Barrick Gold Corporation shareholders | 13,619 | 21,972 | 23,363 | ||||||
| Non-controlling interests (note 21) | 2,389 | 2,664 | 2,191 | ||||||
| Total equity | 16,008 | 24,636 | 25,554 | ||||||
| Contingencies and commitments (notes 14, 15 and 22) | |||||||||
| Total liabilities and equity | $ | 39,837 | $ | 47,478 | $ | 48,886 | |||
| The notes to these unaudited interim financial statements, which are contained in the Third Quarter Report 2013 available on our website are an integral part of these consolidated financial statements. |
| Consolidated Statements of Changes in Equity |
| Barrick Gold Corporation | Attributable to equity holders of the company | ||||||||||||||||
| (in millions of United States dollars) (Unaudited) | Common Shares (in thousands) | Capital stock | Retained earnings | Accumulated other comprehensive income1 | Other2 | Total equity attributable to shareholders | Non-controlling interests | Total equity | |||||||||
| At January 1, 2013 (restated - note 2B) | 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 | ||
| At January 1, 2012 | 1,000,423 | $ | 17,892 | $ | 4,562 | $ | 595 | $ | 314 | $ | 23,363 | $ | 2,191 | $ | 25,554 | ||
| Net income | - | - | 2,475 | - | - | 2,475 | 19 | 2,494 | |||||||||
| Total other comprehensive loss | - | - | - | (57) | - | (57) | - | (57) | |||||||||
| Total comprehensive income (loss) | - | - | 2,475 | (57) | - | 2,418 | 19 | 2,437 | |||||||||
| Transactions with owners | |||||||||||||||||
| Dividends | - | - | (550) | - | - | (550) | - | (550) | |||||||||
| Issued on exercise of stock options | 168 | 6 | - | - | - | 6 | - | 6 | |||||||||
| Recognition of stock option expense | - | 13 | - | - | - | 13 | - | 13 | |||||||||
| Funding from non-controlling interests | - | - | - | - | - | - | 390 | 390 | |||||||||
| Other decrease in non-controlling interests | - | - | - | - | - | - | (21) | (21) | |||||||||
| Total transactions with owners | 168 | 19 | (550) | - | - | (531) | 369 | (162) | |||||||||
| At September 30, 2012 (restated - note 2B) | 1,000,591 | $ | 17,911 | $ | 6,487 | $ | 538 | $ | 314 | $ | 25,250 | $ | 2,579 | $ | 27,829 | ||
| 1 | Includes cumulative translation losses at September 30, 2013: $61 million (September 30, 2012: gain of $15 million). |
| 2 | Includes additional paid-in capital as at September 30, 2013: $276 million (December 31, 2012: $276 million; September 30, 2012: $276 million) and convertible borrowings - equity component as at September 30, 2013: $38 million (December 31, 2012: $38 million; September 30, 2012: $38 million). |
| The notes to these unaudited interim financial statements, which are contained in the Third Quarter Report 2013 available on our website are an integral part of these consolidated financial statements. | |
| CORPORATE OFFICE Barrick Gold Corporation Brookfield Place, TD Canada Trust Tower Suite 3700 161 Bay Street, P.O. Box 212 Toronto, Canada M5J 2S1 Tel: (416) 861-9911 Fax: (416) 861-0727 Toll-free throughout North America: 1-800-720-7415 Email: investor@barrick.com Website: www.barrick.com SHARES LISTED ABX - The New York Stock Exchange The Toronto Stock Exchange | | TRANSFER AGENTS AND REGISTRARS CST Trust Company P.O. Box 700, Postal Station B Montreal, Quebec, Canada H3B 3K3 or American Stock Transfer & Trust Company, LLC 6201 - 15 Avenue Brooklyn, NY 11219 Tel: 1-800-387-0825 Toll-free throughout North America Fax: 1-888-249-6189 Email: inquiries@canstockta.com Website: www.canstockta.com |
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information contained or incorporated by reference in this Third Quarter Report 2013, 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 and copper or certain other commodities (such as silver, diesel fuel and electricity); changes in national and local government legislation, taxation, controls, regulations, expropriation or nationalization of property and political or economic developments in Canada, the United States and other jurisdictions in which the company does or may carry on business in the future; 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; fluctuations in the currency markets; operating or technical difficulties in connection with mining or development activities; the speculative nature of mineral exploration and development, including the risks of obtaining necessary licenses and permits; contests over title to properties, particularly title to undeveloped properties; risk of loss due to acts of war, terrorism, sabotage and civil disturbances; changes in U.S. dollar interest rates; risks arising from holding derivative instruments; litigation; 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 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/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 2013 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 Information:
Vice President, Investor Relations
(416) 307-7422
aschwalm@barrick.com
MEDIA CONTACT: Andy Lloyd
Vice President, Communications
(416) 307-7414
alloyd@barrick.com