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Photo from Africa Barrick Gold of the North Mara minein northeast Tanzania in the Tarime district of the Mara region.

What in the world does Barrick Gold Corp. do now?

The massive gold miner's already written off roughly $13-billion (U.S.) in six months, cut capital spending by $2-billion since January and slashed its dividend to just one-quarter of its former glory.

Have no fear: there is a game plan. Barrick's promised to stay stringent on capital spending and executives are now hell bent on cutting out their high-cost mines, many of which are located in Australia and Africa.

Before the latest round of writedowns, Barrick revised its internal gold price assumptions to $1,300 (U.S.) per ounce to determine which mines weren't profitable at this level. Some of the latest impairment charges stem from this analysis.

Now the company's analyzing its portfolio again, and this time it's assuming a scenario in which gold prices drop to $1,100 per ounce.

At this price, some Australian and African assets simply don't make sense. Porgera, the major Australian project, comes with an all-in sustaining cost of $1,306 per ounce. (This costs metric comprises a comprehensive set of expenses.) Barrick's share of African Barrick Gold assets comes with all-in sustaining costs of $1,550 to $1,600 per ounce.

Referring to mines like these, Barrick executives repeatedly mentioned on a conference call Thursday that they may "suspend, close or divest these operations" even though they are expected to account for roughly 25 per cent of Barrick's 2013 production.

Chief executive officer Jamie Sokalsky vowed to be ruthless if need be. "Just because a mine is profitable, it doesn't mean it can't be optimized," he said.

Barrick's already made headway on this strategy. On Thursday, Mr. Sokalsky said the company is "well advanced in a process to sell certain Australia assets."

Now contrast these costs with Barrick's stellar North American assets. Projects in this region produced gold at an all-in sustaining cost of $797 per ounce in the second quarter.

South America's production was also lucrative, with all-in costs of $821 per ounce. The big wrinkle on this continent, however, is the pending Pascua-Lama project in Chile and Argentina. Mr. Sokalsky acknowledged that many people have questioned whether Barrick should forge ahead with it given all the delays, but he said the miner certainly will, regardless of the extended timeline.

Sunk costs likely have something to do with that. To date Barrick's spent $5.4-billion on Pascua-Lama.

Despite all the bad news, investors appear to like the game plan. By midday Barrick's shares were up 3.5 per cent. However, this optimism must be kept in perspective. At $17.60 per share, Barrick's stock is at a level that was last seen, until very recently, in 1992.

(Tim Kiladze is a Globe and Mail banking reporter.)

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