TORONTO – Despite strong operating results from its gold and copper mines, Barrick Gold has taken a US$8.7-billion after-tax impairment charge in Q2 2013. The total charge is comprised of $5.1 billion for the Pascua-Lama project, $2.3 billion in goodwill impairments, and $1.3 billion in other asset impairment charges. The company blames what it calls "recent declines in metal prices."
Barrick recorded adjusted net earnings of US$663 million (US$0.66 per share) and an adjusted operating cash flow of US$804 million. This was after producing 1.8 million oz of gold and 134 million lb of copper during the quarter.
As are other miners, Barrick is taking steps to cut costs. The 2013 capital budget was cut by US$1.5 billion in the second quarter, brining total costs for the first half of the year to US$2.0 billion. Capital guidance reduced to US$4.5 billion to US$5.0 billion from US$5.7 million to US$6.3 billion. The cost of sales guidance is likewise reduced to US$7.2 billion to US$7.8 billion from $7.9-$8.4 billion.
In Q2 alone, the company shaved US$600 million off its operating costs; US$200 million off its sustaining, development and mine expansion budget; US$600 million off project capital (primarily related to Pascua-Lama); and $50 million in exploration and evaluation expenditures. As well, the company has cut 30% of its head office jobs and made significant reductions at regional locations.
Barrick president and CEO said high mines with all-in sustaining costs above US$1,000/oz will be the target of changed mining plans, suspension or divestiture. Seventy-five per cent of Barrick's output comes from operations with AICS of less than US$750/oz. And five key mines – Cortex and Goldstrike in Nevada, Pueblo Viejo in Dominican Republic, Veladero in Argentina, and Lagunas Norte in Peru – have AISC of US$600 to US$700 per ounce and will account for 60% of 2013 gold output.
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