Barrick Gold Corporation (NYSE:GOLD) (TSX:ABX) reported preliminary third quarter sales of 1.25 million ounces of gold and 116 million pounds of copper, as well as preliminary third quarter production of 1.16 million ounces of gold and 103 million pounds of copper. Group gold production for the first nine months of 2020 was 3.6 million ounces, and the company remains on track to achieve full-year production guidance1.
The average market price for gold in the third quarter was $1,909 per ounce, while the average market price for copper in the third quarter was $2.96 per pound.
Preliminary third quarter gold production was slightly higher than the second quarter of 2020, notwithstanding the fact that there was no third quarter production at Porgera in Papua New Guinea which was placed on care and maintenance on April 25, 2020. Excluding Porgera, third quarter gold production was 3% higher than the second quarter mainly due to stronger performances from Carlin and Pueblo Viejo following the completion of scheduled plant maintenance in the prior quarter. Preliminary third quarter gold sales were slightly higher than the previous quarter, and exceeded third quarter production following the export of the remaining stockpiled concentrate in Tanzania. Third quarter gold cost of sales per ounce2 is expected to be in line, total cash costs per ounce3 are expected to be 2-4% lower and gold all-in sustaining costs per ounce3 are expected to be 5-7% lower, than in the second quarter of 2020.
Preliminary third quarter copper production and sales were both lower than the previous quarter, primarily as a result of lower throughput at Lumwana following plant maintenance completed in the quarter. Third quarter copper cost of sales per pound2 is expected to be 4-6% lower and C1 cash costs per pound3 are expected to be 5-7% lower than the prior quarter. Copper all-in sustaining costs per pound3 are expected to be 6-8% higher than the second quarter of 2020 as a result of higher capitalized stripping at Lumwana.
Barrick will provide additional discussion and analysis regarding its third quarter production and sales when the company reports its quarterly results before North American markets open on November 5, 2020.
The following table includes preliminary gold and copper production and sales results from Barrick’s operations:
|Three months ended||Nine months ended|
|September 30, 2020||September 30, 2020|
|Gold (equity ounces (000))|
|Turquoise Ridge (61.5%)||76||76||239||242|
|Long Canyon (61.5%)||43||45||109||110|
|Nevada Gold Mines (61.5%)||538||542||1,585||1,592|
|Pueblo Viejo (60%)||129||129||383||388|
|North Mara (84%)||67||69||200||206|
|Copper (equity pounds (millions))|
|Jabal Sayid (50%)||17||21||57||56|
The scientific and technical information contained in this news release has been reviewed and approved by: Steven Yopps, MMSA, Manager of Growth Projects, Nevada Gold Mines; Chad Yuhasz, P.Geo, Mineral Resource Manager, Latin America and Asia Pacific; and Simon Bottoms, CGeol, MGeol, FGS, FAusIMM, Mineral Resources Manager, Africa and Middle East – each a “Qualified Person” as defined in National Instrument 43-101 – Standards of Disclosure for Mineral Projects.
Barrick is closely monitoring the global Covid-19 pandemic and Barrick’s guidance may be impacted if the operation or development of our mines and projects is disrupted due to efforts to slow the spread of the virus.
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% Pueblo Viejo, 38.5% Nevada Gold Mines, 63.1% South Arturo, 20% Loulo-Gounkoto, 16% North Mara, Bulyanhulu and Buzwagi and 10.3% of Tongon and including our proportionate share of cost of sales attributable to equity method investments (Kibali) in 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 our proportionate share of cost of sales attributable to equity method investments (Zaldívar and Jabal Sayid), divided by consolidated copper pounds (including our proportionate share of copper pounds from our equity method investments).
Total cash costs per ounce, all-in sustaining costs per ounce and all-in costs per ounce are non-GAAP financial measures which are calculated based on the definition published by the World Gold Council (a market development organization for the gold industry comprised of and funded by 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 our gold mining operations and its ability to generate positive cash flow, both on an individual site basis and an overall company basis.
Total cash costs start with our cost of sales related to gold production and removes depreciation, the non-controlling interest of cost of sales and includes by-product credits. All-in sustaining costs start with total cash costs and include sustaining capital expenditures, sustaining leases, general and administrative costs, minesite exploration and evaluation costs and reclamation cost accretion and amortization. These additional costs reflect the expenditures made to maintain current production levels.
We believe that our use of total cash costs, all-in sustaining costs and all-in 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 our operating performance and also our ability to generate free cash flow from current operations and to generate 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 IFRS and the amount of free cash flow that is being generated by a mine and therefore we believe these measures are useful non-GAAP operating metrics and supplement our IFRS disclosures. These measures are not representative of all of our cash expenditures as they do not include income tax payments, interest costs or dividend payments. These measures do not include depreciation or amortization.
Total cash costs per ounce, all-in sustaining costs and all-in costs are intended to provide additional information only and 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 our copper mine operations. We believe that C1 cash costs per pound enables investors to better understand the performance of our copper operations in comparison to other copper producers who present results on a similar basis. C1 cash costs per pound excludes royalties and production taxes and non-routine charges as they are not direct production costs. All-in sustaining costs per pound is similar to the gold all-in sustaining costs metric and management uses this to better evaluate the costs of copper production. We believe this measure enables investors to better understand the operating performance of our copper mines as this measure reflects all of the sustaining expenditures incurred in order to produce copper. All-in sustaining costs per pound includes C1 cash costs, sustaining capital expenditures, sustaining leases, general and administrative costs, minesite exploration and evaluation costs, royalties and production taxes, reclamation cost accretion and amortization and write-downs taken on inventory to net realizable value.
Barrick will provide a full reconciliation of these non-GAAP financial measures when the Company reports its quarterly results on November 5, 2020.
Includes Nevada Gold Mines’ 60% equity share of South Arturo.
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