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energy and resources

Barrick Gold’s Tulawaka mine in northwest Tanzania.

Barrick Gold Corp. is on track to lose its long-held crown as the world's largest gold producer after forecasting production for this year that will likely fall short of U.S. competitor Newmont Mining Corp.

In a release announcing its fourth-quarter results after the markets closed on Wednesday, Toronto-based Barrick said it expects to produce between 4.5 million to 5 million ounces of gold in 2018. In December, Newmont predicted that its 2018 gold production will be between 4.9 million to 5.4 million ounces.

While Colorado-based Newmont had already passed Barrick in terms of market capitalization, it had lagged Barrick in production.

In 2006, Barrick became the biggest producer of gold after it closed the acquisition of fellow Canadian miner Placer Dome Inc. But over the past few years, Barrick has been increasingly focused on profitable mining through generating free cash flow, as opposed to being the top dog in production. It's a strategy that has seen it sell much of its portfolio of high-cost, non-core mines.

Barrick has also been focusing on getting a handle on its previous, punishingly high debt load, incurred in part through a failed copper acquisition and by funnelling billions of dollars into developing a South American mine that has yet to produce an ounce of gold, and is now in limbo.

Barrick has reduced its total debt to US$6.4-billion from roughly US$13-billion in 2014. Last year, the company paid down US$1.5-billion and plans to get its debt down to roughly US$5-billion by the end of this year.

On an adjusted basis, the company reported a profit of 22 US cents a share in the fourth quarter, a penny better than analysts surveyed by Thomson Reuters had been expecting.

However, on a net basis, the company lost US$314-million in the quarter. That was mainly because of a previously announced charge of US$429-million related to reclassifying 14 million ounces of gold at its stalled Pascua-Lama project in South America from "reserves" into"resources" – a far-less-certain category of recoverable gold.

One of the biggest challenges the company faces now is replacing its once mammoth reserves. Barrick said its total proven and probable gold reserves were 64.5 million ounces as of the end of December, a 25-per-cent drop compared with the 85.9 million in reserves it held 12 months prior and more than 50 per cent lower than the 139.9 million ounces it held at 2011 year-end.

Barrick's production fell last year to 5.3 million ounces of gold, down from 5.5 million ounces in 2016. Production was weaker partly as a result of the sale of 50 per cent of its Veladero mine in Argentina and troubles at its London-based subsidiary Acacia Mining PLC.

Acacia has been subject to a gold concentrate export ban in Tanzania after running afoul of the government there. Acacia's operations subject to the ban account for about 5 per cent of Barrick's gold production. Barrick owns about 64 per cent of Acacia.

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