Barrick Gold Corp swung to a net loss in its latest quarter, with the world’s biggest gold company taking a number of one-time charges as it grapples with falling production amid a weakening gold price.
On a net basis, Barrick lost $94-million, or 8 cents a share in the second quarter. Barrick took $177-million in charges, including incurring losses on foreign currency, taking an impairment charge on a nickel project, and absorbing costs related to staff reductions.
On an adjusted basis, Barrick made 7 cents a share, below the 12 cents analysts were expecting.
Gold production fell year-over year to 1.1 million ounces of gold in the quarter, versus 1.4 million ounces. Production from Acacia, its London-based subsidiary which operates a number of gold mines in Tanzania, fell to 86,000 ounces from 137,000 ounces. Acacia has been under a gold concentrate export ban for the past 16 months. Last year, Tanzania accused Acacia of defrauding it out of US$200-billion in taxes. Barrick is negotiating on behalf of Acacia to try to end the spat, but a resolution has not been reached.
Barrick maintained its gold production forecast for the year, which is between 4.5 and 5 million ounces, a level that will see it likely fall behind Newmont Mining in production, and lose its title as the world’s biggest gold producer. At the end of last year, Barrick predicted that its production in the first half of 2018 would be lower than the second half, due to lower grades in Nevada and maintenance work at some of its mines. The company is expected to finish 2018 on a much stronger note, with higher production expected over the next two quarters.
Barrick said its debt has come down to US$5.8-billion compared to $6.4-billion in the last quarter. Its debt peaked at US$15.8-billion in 2013 after it halted construction on a massive mine in South America, amid huge cost overruns.
In an announcement that may assuage some fears over its declining reserve base, Barrick said it has made a new high grade gold discovery in Nevada. The discovery called Fourmile is in the Cortez district, where one of its other big gold mines is located. Barrick said it intends to spend an additional $10-million in drilling work at Fourmile this year.
Declining reserves is one of the major investor worries around Barrick. The company’s “proven and probable” gold reserves have fallen 54 per cent, from 140.2 million ounces to 64.5 million over the past five years. Many of the world’s largest gold miners are facing a similar challenge.