Barrick Gold Corporation (NYSE:GOLD) (TSX:ABX) reported preliminary Q1 sales of 1.09 million ounces of gold and 113 million pounds of copper, as well as preliminary Q1 production of 1.10 million ounces of gold and 93 million pounds of copper, in line with our plan. We remain on track to achieve 2021 guidance¹.
The average market price for gold in Q1 was $1,794 per ounce, while the average market price for copper in Q1 was $3.86 per pound.
As expected, preliminary Q1 gold production was lower than Q4 2020 mainly due to mine sequencing at Carlin and Cortez as well as lower grades at Pueblo Viejo, in line with the mine and stockpile processing plan as the development of the expansion project advances. Lower grades and production from Tongon, consistent with the updated extension of the mine life to 2023, were offset by higher grades at Loulo-Gounkoto. As previously guided, the Company’s gold production in the second half of 2021 is expected to be higher than the first half. Accordingly, Q1 2021 gold cost of sales per ounce² is expected to be slightly higher, total cash costs per ounce³ are expected to be 2 to 4% higher and all-in sustaining costs per ounce³ are expected to be 8 to 10% higher than Q4 2020.
Preliminary Q1 2021 copper production was 22% lower than Q4 2020 as expected. Copper sales were 5% higher than the previous quarter as Lumwana sold a portion of its stockpiled concentrate. We continue to expect the Company’s copper production in the second half of 2021 to be stronger than the first half, mainly driven by higher grades from Lumwana. Q1 copper cost of sales per pound² is expected to be 1 to 3% higher and C1 cash costs per pound³ are expected to be in line with the prior quarter. Copper all-in sustaining costs per pound³ are expected to be 6 to 8% lower than Q4 2020, largely due to the increased sales.
Barrick will provide additional discussion and analysis regarding its first quarter production and sales when the company reports its quarterly results before North American markets open on May 5, 2021.
The following table includes preliminary gold and copper production and sales results from Barrick’s operations:
|Three months ended|
|March 31, 2021|
|Gold (equity ounces (000))|
|Turquoise Ridge (61.5%)||92||92|
|Long Canyon (61.5%)||39||39|
|Nevada Gold Mines (61.5%)||485||488|
|Pueblo Viejo (60%)||137||141|
|North Mara (84%)||62||56|
|Copper (equity pounds (millions))|
|Jabal Sayid (50%)||18||17|
First Quarter 2021 Results
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.
Porgera was placed on temporary care and maintenance in April 2020 and is not currently included in our full year 2021 guidance. On April 9, 2021, the Government of Papua New Guinea and Barrick Niugini Limited (“BNL”), the operator of the Porgera joint venture, signed a framework agreement in which they agreed on a partnership for Porgera’s future ownership and operation. We expect to update our guidance to include Porgera following both the execution of definitive agreements to implement the framework agreement and the finalization of a timeline for the resumption of full mine operations.
Gold cost of sales per ounce is calculated as cost of sales across our gold operations (excluding sites in care and maintenance) divided by ounces sold (both on an attributable basis based on Barrick’s ownership share). Copper cost of sales per pound is calculated as cost of sales across our copper operations divided by pounds sold (both on an attributable basis based on Barrick’s ownership share).
References to attributable basis means our 100% share of Hemlo and Lumwana, our 89.7% share of Tongon, our 84% share of North Mara, Bulyanhulu and Buzwagi, our 80% share of Loulo-Gounkoto, our 61.5% share of Nevada Gold Mines, our 60% share of Pueblo Viejo, our 50% share of Veladero, Zaldívar and Jabal Sayid and our 45% share of Kibali.
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 May 5, 2021.
Includes Nevada Gold Mines’ 60% equity share of South Arturo.
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