Barrick Gold Corp. chairman John Thornton looks on during the annual general meeting for shareholders in Toronto on April 28, 2015.MARK BLINCH/Reuters
Barrick Gold Corp. plans to reduce total debt by at least $2-billion this year as the world's largest producer of the metal seeks to shore up its balance sheet following three annual declines in the price of gold.
Barrick may sell additional non-core assets and create new joint ventures and partnerships, the Toronto-based company said Wednesday in a statement reporting a fourth-quarter net loss. In 2015, the miner reduced its total debt by $3.1-billion to $10-billion.
"In the medium term, we aim to reduce our debt to below $5-billion," the company said in the statement. "Philosophically, our goal is to have no debt at all."
Barrick has been aggressively working to cut debt and streamline its operations around roughly half a dozen mines in the Americas. President Kelvin Dushnisky said last month he intends to structure operations to be sustainable "at virtually any foreseeable gold price."
Loss Narrows
Barrick said its net loss in the quarter narrowed to $2.62-billion, or $2.25 a share, from $2.85-billion, or $2.45, a year earlier. Earnings excluding impairment charges of $2.6-billion and other one-time items were 8 cents a share, topping the 6– cent average of 22 estimates compiled by Bloomberg.
Sales decreased to $2.24-billion from $2.51-billion, beating the $2.17-billion average estimate.
Gold futures fell 8 per cent from a year earlier to average $1,104.58 an ounce in the fourth quarter. The price has risen 14 per cent in 2016 following three annual losses.
Barrick expects to produce 5 million to 5.5 million ounces of gold in 2016, compared with 6.12 million last year. Based on its current asset mix, and subject to potential divestments, it expects to maintain annual production of at least 4.5 million ounces through 2020.
'Quality, Not Quantity'
"Our production will be measured by quality, not quantity," Barrick said. "While we are producing fewer ounces today than we have in recent years, we are generating significantly more cash." The company posted positive free cash flow in 2015 – $471-million for the full year – for the first time in four years.
The company said it will continue to cut expenses and expects all-in-sustaining costs at $775 to $825 an ounce this year. The costs fell to $831 in 2015 from $864 a year earlier, Barrick said.
Earlier this year, Barrick regained its status as Canada's biggest gold miner by market value by surpassing Vancouver-based Goldcorp Inc. It is the third-best-performing stock on the Standard & Poor's/TSX Composite Index this year.
In November, Barrick sold a package of U.S.-based mines and projects to Kinross Gold Corp. and Waterton Global Resource Management. That followed earlier asset sales that included a 50 per cent stake in its Zaldivar copper mine in Chile in July. The company has said it will continue to look for buyers of its Golden Sunlight mine and early-stage Hilltop project but that other non-core assets could potentially be sold.