TORONTO, ONTARIO–(Marketwired – July 27, 2016) – Barrick Gold Corporation (NYSE:ABX)(TSX:ABX)
All amounts expressed in US dollars
- Barrick reported net earnings of $138 million ($0.12 per share), and adjusted net earnings1 of $158 million ($0.14 per share) for the second quarter. Second quarter EBITDA2 was $881 million.
- The company reported revenues of $2.01 billion in the second quarter, and net cash provided by operating activities (“operating cash flow”) was $527 million. Barrick generated $274 million in free cash flow3 in the second quarter, marking five consecutive quarters of positive free cash flow.
- Gold production in the second quarter was 1.34 million ounces at a cost of sales applicable to gold of $1.23 billion, and all-in sustaining costs4 of $782 per ounce.
- Compared to the first half of 2015, cost of sales applicable to gold has declined by 14 percent to $2.43 billion. Over the same period, we have reduced our all-in sustaining costs4 by 19 percent.
- For the full year, we expect cost of sales applicable to gold to be in the range of $5.2-$5.5 billion. All-in sustaining cost4 guidance for 2016 has been reduced to $750-$790 per ounce, down from $760-$810 per ounce at the end of the first quarter, and below our original 2016 guidance of $775-$825 per ounce. We continue to expect gold production of 5.0-5.5 million ounces for the year.
- We have reduced total debt by $968 million year-to-date, and remain on track to achieve our $2 billion debt reduction target for the year.
- Commercial production has commenced at the Jabal Sayid copper mine in Saudi Arabia. Reflecting this milestone, we have increased our 2016 copper guidance to 380-430 million pounds, up from our original guidance of 370-410 million pounds.
Barrick Gold Corporation (NYSE:ABX)(TSX:ABX) (Barrick or the company) today reported net earnings of $138 million ($0.12 per share) for the second quarter, and adjusted net earnings1of $158 million ($0.14 per share). Second quarter EBITDA2 was $881 million. Second quarter revenues were $2.01 billion and operating cash flow was $527 million. The company generated $274 million in free cash flow3 in the second quarter, marking five consecutive quarters of positive free cash flow.
Second quarter cost of sales applicable to gold was $1.23 billion, a reduction of 13 percent compared to the prior-year period. Production in the quarter was 1.34 million ounces of gold at all-in sustaining costs4 of $782 per ounce. We continue to expect full-year production of 5.0-5.5 million ounces of gold. We expect cost of sales applicable to gold for 2016 to be in the range of $5.2-$5.5 billion. We have reduced our all-in sustaining cost4guidance to $750-$790 per ounce, down from our most recent range of $760-$810 per ounce.
Our operations continued to deliver robust performance in the second quarter, demonstrating capital discipline, improved operational efficiency and productivity, and stronger cost management as we target Best-in-Class performance. This is driving growing margins and profitability across the entire business, in support of our overriding objective to grow free cash flow per share. At the same time, we continue to strengthen our balance sheet with nearly $1 billion in debt repayments completed so far this year, or roughly half of our $2 billion debt reduction target for 2016. Lower debt levels have better positioned the company to withstand gold price volatility while setting us up to invest in future growth.
Barrick has the industry’s largest gold reserves and resources, with an average reserve grade significantly higher than our peer group average.5 This represents an immense source of value and optionality for the company. Our Growth Group is actively advancing a strategy to grow our free cash flow per share by allocating capital to the opportunities with the best returns. We are pursuing a multi-faceted approach that will optimize the development of our existing reserves and resources, invest in exploration to discover the next major deposit, and assess external opportunities for acquisitions, seed financing, earn-ins, and other partnerships and joint ventures. Ultimately, the investments we make will be focused on growing our free cash flow per share while maintaining strict capital discipline, such that we are continuously upgrading the long-term value of our portfolio. Our existing operations will also contribute to growth by achieving step changes in performance that will drive down our cost structure and expand margins. We will do this by leveraging innovation and new technology, which is a core pillar of our Best-in-Class philosophy.
FINANCIAL HIGHLIGHTS
Second quarter net earnings were $138 million ($0.12 per share) compared to a net loss of $9 million ($0.01 per share) in the prior year period. Adjusted net earnings1 for the second quarter were $158 million ($0.14 per share), compared to $60 million ($0.05 per share) in the prior year period. Higher net earnings reflect a decrease in operating costs, particularly lower fuel and energy prices (even when factoring in fuel hedges above spot prices), favorable foreign exchange movements, reduced royalty expense, and the impact of Best-in-Class initiatives, including lower labor, contractor, and consumable costs, and other operating efficiencies. In addition, earnings benefited from lower exploration, evaluation, and project expenses. The company generated $881 million of EBITDA2 in the second quarter compared to $690 million in the prior year period.
Second quarter revenues were $2.01 billion, compared to $2.23 billion in the prior year period. Operating cash flow in the second quarter was $527 million, compared to $525 million in the second quarter of 2015. Despite lower production as a result of non-core asset sales, operating cash flow remained in line with the prior year period. This was driven by higher gold prices and lower operating costs, as a result of lower energy and fuel costs, combined with lower labor, consumable, and contractor costs, and improved operating efficiencies driven by Best-in-Class initiatives. These gains were partially offset by an increase in working capital, combined with the impact of higher income taxes paid, compared to the prior year period.
Free cash flow3 for the second quarter was $274 million, marking five consecutive quarters of positive free cash flow. This reflects our driving focus on maximizing free cash flow per share through capital discipline, improved operational efficiency and productivity, and stronger cost management.
RESTORING A STRONG BALANCE SHEET
Strengthening our balance sheet remains a top priority. In 2016, we intend to reduce our total debt by at least $2 billion by drawing on our existing cash balance, and by maximizing free cash flow from operations, as well as potential non-core asset sales.
So far this year, we have reduced our total debt by $968 million, representing approximately half of our debt reduction target for the year.
We will continue to pursue non-core asset sales with discipline, and will only proceed with transactions that make sense for the business, on terms we consider favorable to our shareholders.
In this regard, we intend to initiate a process to explore the sale of our 50 percent stake in the KCGM operation in Western Australia.
The company’s liquidity position is strong and continues to improve, underpinned by free cash flow generation across the business, and modest near-term debt repayment obligations. At the end of the second quarter, Barrick had a consolidated cash balance of approximately $2.4 billion.6 The company now has less than $150 million7 in debt due before 2018, and about $5 billion of our outstanding debt of $9 billion does not mature until after 2032. Over the medium term, we aim to reduce our total debt to below $5 billion.
OPERATING HIGHLIGHTS AND OUTLOOK
Our over-arching objective as a business is to grow our free cash flow per share. In support of this objective, we are focused on driving industry-leading margins by improving the productivity and efficiency of our operations. This means a continuous, relentless cycle of improvement and innovation, underpinned by our Best-in-Class program. Our aspiration is to achieve all-in sustaining costs below $700 per ounce by 2019.
Barrick produced 1.34 million ounces of gold in the second quarter at a cost of sales of $1.23 billion, compared to 1.45 million ounces at a cost of sales of $1.41 billion in the prior year period. All-in sustaining costs4 in the second quarter were $782 per ounce, compared to $895 per ounce in the second quarter of 2015. Excluding the impact of divested mines, production for the second quarter increased by 126,000 ounces.
Compared to the first half of 2015, cost of sales applicable to gold declined by 14 percent to $2.43 billion, primarily due to fewer ounces sold as a result of divestments. Cost of sales at our remaining operations was in line with the prior-year period, with higher grades and sales volumes offset by a decrease in direct mining costs. Compared to the first half of 2015, all-in sustaining costs4 have fallen by 19 percent. These reductions reflect decreased direct mining costs, particularly lower fuel and energy prices, reduced royalty expense, and the impact of Best-in-Class initiatives, including lower labor, contractor, and consumable costs, and more predictive and precise maintenance. Lower mine site sustaining capital expenditures and a higher proportion of production from lower cost operations also contributed to lower all-in sustaining costs.
Please see page 31 of Barrick’s Second Quarter 2016 Management Discussion and Analysis for individual operating segment performance details.
We continue to expect full-year gold production of 5.0-5.5 million ounces. For the full year, we expect cost of sales applicable to gold to be in the range of $5.2-$5.5 billion. We have reduced our all-in sustaining cost4 guidance for 2016 to $750-$790 per ounce, down from $760-$810 per ounce at the end of the first quarter, and below our original 2016 guidance of $775-$825 per ounce. All-in sustaining costs are now expected to be highest in the third quarter, reflecting a shift in the timing of certain sustaining capital expenditures to the second half of the year.
Capital expenditures for 2016 are now expected to be $1.25-$1.40 billion, down from $1.35-$1.55 billion at the end of the first quarter, and below our original 2016 guidance range of $1.35-$1.65 billion.
As we continue to embed Best-in-Class across the portfolio, we expect to identify additional savings opportunities over the course of the year.
Second Quarter | Current | Original | ||||
Gold | 2016 | 2016 Guidance | 2016 Guidance | |||
Production8 (000s of ounces) | 1,340 | 5,000-5,500 | 5,000-5,500 | |||
Cost of sales applicable to gold ($millions) | 1,227 | 5,200-5,500 | N/A | |||
All-in sustaining costs4 ($per ounce) | 782 | 750-790 | 775-825 | |||
Cash costs4($per ounce) | 578 | 540-570 | 550-590 | |||
Copper | ||||||
Production8(millions of pounds) | 103 | 380-430 | 370-410 | |||
Cost of sales applicable to copper ($millions) | 79 | 275-320 | N/A | |||
All-in sustaining costs9($per pound) | 2.14 | 1.95-2.25 | 2.05-2.35 | |||
C1 cash costs9($per pound) | 1.52 | 1.35-1.65 | 1.45-1.75 | |||
Total Capital Expenditures10($millions) | 284 | 1,250-1,400 | 1,350-1,650 | |||
Mine Site Guidance Updates
Based on improved operational performance, we now anticipate higher production and lower costs at both Cortez and Turquoise Ridge. Cortez is now expected to produce 980,000-1,050,000 ounces of gold at all-in sustaining costs4 of $520-$550 per ounce, compared to our previous guidance range of 900,000-1,000,000 ounces at all-in sustaining costs of $580-$640 per ounce. At Turquoise Ridge, our share of production is now anticipated to be in the range of 240,000-260,000 ounces of gold at all-in sustaining costs of $640-$700 per ounce, compared to our previous guidance range of 200,000-220,000 ounces at all-in sustaining costs of $770-$850 per ounce.
Reflecting the impact of severe winter weather conditions in the first half of 2016, we now expect full year gold production at Veladero to be in the range of 580,000-640,000 ounces, down from our previous guidance of 630,000-690,000 ounces. All-in sustaining cost4 guidance remains unchanged at $790-$860 per ounce.
Copper
Copper production in the second quarter was 103 million pounds at a cost of sales of $79 million, and all-in sustaining costs9of $2.14 per pound. The Jabal Sayid project, a 50-50 joint venture with Saudi Arabian Mining Company (Ma’aden), commenced commercial production on July 1. Barrick’s share of 2016 copper production from Jabal Sayid is expected to be 10-20 million pounds at all-in sustaining costs of $2.80-$3.10 per pound. The mine is expected to ramp up to a production rate of about 100 million pounds per year in the second half of 2017, as additional underground development is completed.
Reflecting the start of commercial production at Jabal Sayid, we have increased our copper production guidance for 2016 to 380-430 million pounds, up from our original guidance of 370-410 million pounds. For the full year, we expect cost of sales applicable to copper to be in the range of $275-$320 million. Copper all-in sustaining cost9 guidance remains unchanged at $1.95-$2.25 per pound.
In June 2016, the Zambian government passed legislation to amend the royalty tax for mining operations to a variable rate based on the prevailing copper price, effective June 1, 2016. These rates are four percent at copper prices below $2.04; five percent at copper prices between $2.04 and $2.72; and six percent at copper prices of $2.72 and above. Legislation was also passed to remove the 15 percent variable profit tax on income from mining companies. Our 2016 copper guidance takes into consideration the revised royalty rates commencing June 1.
BEST-IN-CLASS IN ACTION
Pueblo Viejo Autoclaves Case Study
Applying Creative Thinking and Knowledge to Unlock Potential
The key to unlocking the massive refractory ore body at Pueblo Viejo rests within four giant autoclaves-the largest ever used in the gold mining industry. Each autoclave weighs 780 tonnes, and is roughly 38 meters long and six meters in diameter-about as wide as a Boeing 747 fuselage. Improving the availability and throughput of the autoclaves has the potential to unlock substantial value for the mine.
Until recently, each autoclave has required, on average, a 22-day maintenance shutdown every six months. Large metal walls that separate the compartments inside each autoclave begin to fail as a result of the forces generated by continuous agitation of the ore slurry. A buckled or failed wall can interfere with normal operation, damaging the agitator blades and shafts, and accelerating the build-up of scale and sand, thereby requiring frequent maintenance.
Challenging and pushing past technical limits is a critical component of our Best-in-Class philosophy. Faced with this challenge, the team at Pueblo Viejo came up with a plan to increase autoclave availability and throughput by extending the period between maintenance shutdowns-from every six months, to every seven or potentially eight months.
To achieve this, the team applied Barrick’s extensive autoclave operating experience to propose a number of critical modifications to the autoclaves. High oxidization rates inside the autoclaves implied the number of interior compartments could be reduced, thereby mitigating the build-up of scale, and the associated maintenance requirements. However, the remaining compartment walls would continue to fail at a similar rate, limiting the potential gains. To solve this problem, the team worked with an engineering partner to develop a new design for the interior compartment walls. The design better integrates the walls into the autoclaves using stronger titanium structure sections, improved bracing, and larger bolts.
The new walls have been successfully installed in two of the mine’s four autoclaves. Initial results have been positive, indicating that increased run-time between shutdown maintenance is achievable. If successful in all four autoclaves, this initiative has the potential to increase throughput at Pueblo Viejo by 240,000 tonnes per year (100 percent basis), increasing autoclave availability from 84 percent to 86.5 percent-driving increased production, lower unit costs, and additional free cash flow from the operation. Other benefits include reducing materials cost for autoclave maintenance work (spare parts, valves, and ancillary equipment), and reducing contractor costs, due to fewer shutdowns per year.
Goldstrike Open Pit Haulage Case Study
When Challenging Conventional Wisdom Pays Off
Over nearly 30 years of managing one of the largest open pit gold mines in the world, conventional wisdom at Goldstrike suggested that the technical limit for open pit haul truck utilization was 79 percent, taking into account the mine runs two open pits seven miles apart. In simple terms, for every hour of potential operating time, the average truck achieved about 48 minutes of productive work time. At the end of 2015, the mine was operating a fleet of 29 Komatsu 930 haul trucks.
Motivated by a desire to challenge conventional wisdom in pursuit of Best-in-Class performance, the open pit team at Goldstrike evaluated how to increase haul truck availability to a level the mine had never achieved. Drawing on other experiences from across the industry, they came up with a concept that allows some haul trucks to be parked, while significantly increasing utilization of the trucks remaining in service. The secret was breaks-but not the brakes on the trucks. Typically, when haul truck drivers at Goldstrike were scheduled to take a break, they simply pulled over in a safe location and enjoyed a rest, usually spent inside the cab of the truck itself. This had trucks idling, rather than engaging in productive work.
Earlier this year, Goldstrike began testing a new system. The mine is in the process of installing a series of modular break rooms at strategic locations around the open pit where drivers can rest. While drivers are on break, relief drivers take over operation of the trucks. In just six months, the results have been impressive: a six percent improvement in haul truck utilization in the open pit, moving from 79 percent to 85 percent; and six haul trucks taken out of the fleet. Today, the mine is moving the same amount of material in the open pit, with fewer trucks. This initiative, combined with other improvement projects, has helped to reduce open pit mining costs at Goldstrike from $1.40 per tonne at the start of the year to $1.25 per tonne today. The shift to using properly-configured break rooms also increases safety, by promoting a more restful environment for operators.
As often happens, when you remove one bottleneck, other opportunities for improvement present themselves. The open pit team is now evaluating how to further optimize shovel use at the mine, matching the right shovels with the right haulage plans and ore types.
TECHNICAL INFORMATION
The scientific and technical information contained in this press release has been reviewed and approved by Steven Haggarty, P. Eng., Senior Director, Metallurgy of Barrick who is a “Qualified Person” as defined in National Instrument 43-101 – Standards of Disclosure for Mineral Projects.
APPENDIX 1 – Updated 2016 Operating and Capital Expenditure Guidance | ||||||||
GOLD PRODUCTION AND COSTS | ||||||||
Production (millions of ounces) |
Cost of sales ($ millions) |
All-in sustaining costs4 ($ per ounce) |
Cash costs4 ($ per ounce) |
|||||
Cortez | 0.980-1.050 | 520-550 | 430-450 | |||||
Goldstrike | 0.975-1.075 | 780-850 | 560-610 | |||||
Pueblo Viejo (60%) | 0.600-0.650 | 550-590 | 420-450 | |||||
Lagunas Norte | 0.410-0.450 | 580-630 | 410-450 | |||||
Veladero | 0.580-0.640 | 790-860 | 520-570 | |||||
Sub-total | 3.500-3.900 | 650-700 | 480-510 | |||||
Porgera (47.5%) | 0.230-0.260 | 850-960 | 650-730 | |||||
Acacia (63.9%) | 0.480-0.500 | 950-980 | 670-700 | |||||
KCGM (50%) | 0.350-0.365 | 670-700 | 610-630 | |||||
Hemlo | 0.215-0.230 | 800-850 | 650-690 | |||||
Turquoise Ridge (75%) | 0.240-0.260 | 640-700 | 480-520 | |||||
Golden Sunlight | 0.030-0.045 | 1,080-1,130 | 990-1,100 | |||||
Total Gold | 5.000-5.50011 | 5,200-5,500 | 750-790 | 540-570 | ||||
COPPER PRODUCTION AND COSTS | ||||
Production (millions of pounds) |
Cost of sales ($ millions) |
All-in sustaining costs9 ($ per pound) |
C1 cash costs9 ($ per pound) |
|
Zaldívar (50%) | 100-120 | 2.20-2.40 | 1.70-1.90 | |
Lumwana | 270-290 | 1.80-2.10 | 1.20-1.50 | |
Jabal Sayid (50%) | 10-20 | 2.80-3.10 | 1.90-2.20 | |
Total Copper | 380-430 | 275-320 | 1.95-2.25 | 1.35-1.65 |
CAPITAL EXPENDITURES | |||
($ millions) | |||
Mine site sustaining | 1,100-1,200 | ||
Project12 | 150-200 | ||
Total Capital Expenditures | 1,250-1,400 | ||
APPENDIX 2 –2016 Outlook Assumptions and Economic Sensitivity Analysis | |||||||||||
2016 Guidance Assumption | Hypothetical Change |
Impact on Revenue (millions) | Impact on Cost of sales (millions) |
Impact on All-in sustaining costs4,9 |
|||||||
Gold revenue, net of royalties | $1,250/oz | +/- $100/oz | +/- $258 | n/a | +/- $3/oz | ||||||
Copper revenue, net of royalties | $2.10/lb | +/- $0.50/lb | +/- $98 | n/a | +/- $0.03/lb | ||||||
Gold all-in sustaining costs4 | |||||||||||
Gold royalties & production taxes | $1,250/oz | +/- $100/oz | n/a | +/- $8 | +/- $3/oz | ||||||
WTI crude oil price13 | $50/bbl | +/- $10/bbl | n/a | +/- $3 | +/- $1/oz | ||||||
Australian dollar exchange rate | 0.73 : 1 | +/- 10% | n/a | +/- $14 | +/- $5/oz | ||||||
Canadian dollar exchange rate | 1.30 : 1 | +/- 10% | n/a | +/- $16 | +/- $6/oz | ||||||
Copper all-in sustaining costs9 | |||||||||||
WTI crude oil price13 | $50/bbl | +/- $10/bbl | n/a | +/- $2 | +/- $0.01/lb | ||||||
Chilean peso exchange rate | 690 : 1 | +/- 10% | n/a | +/- $4 | +/- $0.02/lb | ||||||
ENDNOTES | ||
(1) | “Adjusted net earnings” and “adjusted net earnings per share” are non-GAAP financial performance measures. Adjusted net earnings excludes the following from net earnings: certain impairment charges (reversals), gains (losses) and other one-time costs relating to acquisitions or dispositions, foreign currency translation gains (losses), significant tax adjustments not related to current period earnings and unrealized gains (losses) on non-hedge derivative instruments. The company uses this measure internally to evaluate our underlying operating performance for the reporting periods presented and to assist with the planning and forecasting of future operating results. Barrick believes that adjusted net earnings is a useful measure of our performance because these adjusting items do not reflect the underlying operating performance of our core mining business and are not necessarily indicative of future operating results. Adjusted net earnings and adjusted net earnings per share are intended to provide additional information only and do not have any standardized meaning under IFRS and may not be comparable to similar measures of performance presented by other companies. They should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Further details on these non-GAAP measures are provided in the MD&A accompanying Barrick’s financial statements filed from time to time on SEDAR at http://www.sedar.com/ and on EDGAR at http://www.sec.gov/. |
Reconciliation of Net Earnings to Adjusted Net Earnings and Adjusted Net Earnings per Share1 | |||||||||||||||
($ millions, except per share amounts in dollars) | For the three months ended June 30 | For the six months ended June 30 | |||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net earnings (loss) attributable to equity holders of the company | $ | 138 | $ | (9 | ) | $ | 55 | $ | 48 | ||||||
Impairment charges related to intangibles, goodwill, property, plant and equipment, and investments | 4 | 35 | 5 | 40 | |||||||||||
Acquisition/disposition (gains)/losses | (11 | ) | (2 | ) | (2 | ) | (26 | ) | |||||||
Foreign currency translation losses | 23 | 33 | 162 | 31 | |||||||||||
Significant tax adjustments3 | 3 | 26 | 54 | 32 | |||||||||||
Other expense adjustments4 | 6 | 2 | 74 | 28 | |||||||||||
Unrealized gains on non-hedge derivative instruments | (5 | ) | 3 | (11 | ) | 4 | |||||||||
Tax effect and non-controlling interest | – | (28 | ) | (52 | ) | (35 | ) | ||||||||
Adjusted net earnings | $ | 158 | $ | 60 | $ | 285 | $ | 122 | |||||||
Net earnings (loss) per share2 | 0.12 | (0.01 | ) | 0.05 | 0.04 | ||||||||||
Adjusted net earnings per share2 | 0.14 | 0.05 | 0.24 | 0.10 |
1 | Amounts presented in this table are pre-tax and non-controlling interest. | |
2 | Calculated using weighted average number of shares outstanding under the basic method of earnings per share. | |
3 | Significant tax adjustments for the current year primarily relate to a tax provision booked by Acacia in Q1 2016. | |
4 | Other expense adjustments for the current year relate to losses on debt extinguishment and the impact of the decrease in the discount rate used to calculate the provision for environmental remediation at our closed mines. |
2 | “EBITDA” and “adjusted EBITDA” are non-GAAP financial performance measures. EBITDA excludes income tax expense, finance costs, finance income and depreciation from net earnings. Barrick believes that EBITDA is a valuable indicator of our ability to generate liquidity by producing operating cash flow. EBITDA is also frequently used by investors and analysts for valuation purposes. Adjusted EBITDA removes the effect of “impairment charges” which are not reflective of our ability to generate liquidity by producing operating cash flow. EBITDA and adjusted EBITDA are intended to provide additional information only and do not have any standardized meaning under IFRS and may not be comparable to similar measures of performance presented by other companies. They should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Further details on these non-GAAP measures are provided in the MD&A accompanying Barrick’s financial statements filed from time to time on SEDAR at http://www.sedar.com/ and on EDGAR at http://www.sec.gov/. | |
Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA | |||||||||||||||||
($ millions, except per share amounts in dollars) | For the three months ended June 30 | For the six months ended June 30 | |||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Net earnings (loss) | $ | 176 | $ | (9 | ) | $ | 104 | $ | 80 | ||||||||
Income tax expense | 173 | 103 | 359 | 208 | |||||||||||||
Finance costs, net1 | 150 | 177 | 347 | 355 | |||||||||||||
Depreciation | 382 | 419 | 767 | 840 | |||||||||||||
EBITDA | $ | 881 | $ | 690 | $ | 1,577 | $ | 1,483 | |||||||||
Impairment charges | 4 | 35 | 5 | 40 | |||||||||||||
Adjusted EBITDA | $ | 885 | $ | 725 | $ | 1,582 | $ | 1,523 | |||||||||
Reported as: | |||||||||||||||||
Cortez | $ | 190 | $ | 117 | $ | 402 | $ | 178 | |||||||||
Goldstrike | 160 | 100 | 294 | 218 | |||||||||||||
Pueblo Viejo | 193 | 161 | 419 | 367 | |||||||||||||
Lagunas Norte | 96 | 136 | 179 | 281 | |||||||||||||
Veladero | 87 | 93 | 159 | 192 | |||||||||||||
Turquoise Ridge | 46 | 32 | 72 | 61 | |||||||||||||
Acacia | 134 | 70 | 210 | 136 | |||||||||||||
Other | (21 | ) | 16 | (153 | ) | 90 | |||||||||||
Impairment charges | (4 | ) | (35 | ) | (5 | ) | (40 | ) | |||||||||
EBITDA | $ | 881 | $ | 690 | $ | 1,577 | $ | 1,483 | |||||||||
Impairment charges | 4 | 35 | 5 | 40 | |||||||||||||
Adjusted EBITDA | $ | 885 | $ | 725 | $ | 1,582 | $ | 1,523 |
1 | Finance costs exclude accretion. |
3 | “Free cash flow” is a non-GAAP financial performance measure which excludes capital expenditures from Net cash provided by operating activities. Barrick believes this to be a useful indicator of our ability to operate without reliance on additional borrowing or usage of existing cash. Free cash flow is intended to provide additional information only and does not have any standardized meaning under IFRS and may not be comparable to similar measures of performance presented by other companies. Free cash flow should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. |
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow | ||||||||||||||||
($ millions) | For the three months ended June 30 | For the six months ended June 30 | ||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net cash provided by operating activities | $ | 527 | $ | 525 | $ | 978 | $ | 841 | ||||||||
Capital expenditures | (253 | ) | (499 | ) | (523 | ) | (1,013 | ) | ||||||||
Free cash flow | $ | 274 | $ | 26 | $ | 455 | $ | (172 | ) | |||||||
4 | “Cash costs” per ounce and “All-in sustaining costs” per ounce are non-GAAP financial performance measures. “Cash costs” per ounce is based on cost of sales but excludes, among other items, the impact of depreciation. “All-in sustaining costs” per ounce begins with “Cash costs” per ounce and adds further costs which reflect the additional costs of operating a mine, primarily sustaining capital expenditures, general & administrative costs and minesite exploration and evaluation costs. Barrick believes that the use of “cash costs” per ounce and “all-in sustaining costs” per ounce will assist investors, analysts and other stakeholders in understanding the costs associated with producing gold, understanding the economics of gold mining, assessing our operating performance and also our ability to generate free cash flow from current operations and to generate free cash flow on an overall company basis. “Cash costs” per ounce and “All-in sustaining costs” per ounce are intended to provide additional information only and do not have any standardized meaning under IFRS. Although a standardized definition of all-in sustaining costs was published in 2013 by the World Gold Council (a market development organization for the gold industry comprised of and funded by 18 gold mining companies from around the world, including Barrick), it is not a regulatory organization, and other companies may calculate this measure differently. These measures should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. Further details on these non-GAAP measures are provided in the MD&A accompanying Barrick’s financial statements filed from time to time on SEDAR at http://www.sedar.com/ and on EDGAR at http://www.sec.gov/. | |
Reconciliation of Gold Cost of Sales to Cash costs per ounce, All-in sustaining costs per ounce and All-in costs per ounce | |||||||||||||||||||||
For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||
Footnote | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||
Cost of sales related to gold production | $ | 1,227 | $ | 1,413 | $ | 2,430 | $ | 2,838 | |||||||||||||
Depreciation | (365 | ) | (378 | ) | (734 | ) | (752 | ) | |||||||||||||
By-product credits | 1 | (46 | ) | (53 | ) | (84 | ) | (112 | ) | ||||||||||||
Realized (gains)/losses on hedge and non-hedge derivatives | 2 | 26 | 27 | 57 | 47 | ||||||||||||||||
Non-recurring items | 3 | – | – | (10 | ) | – | |||||||||||||||
Other | 4 | (6 | ) | 7 | (15 | ) | 15 | ||||||||||||||
Non-controlling interests (Pueblo Viejo and Acacia) | (90 | ) | (100 | ) | (175 | ) | (212 | ) | |||||||||||||
Cash costs | $ | 746 | $ | 916 | $ | 1,469 | $ | 1,824 | |||||||||||||
General & administrative costs | 88 | 70 | 146 | 137 | |||||||||||||||||
Minesite exploration and evaluation costs | 6 | 9 | 16 | 16 | 25 | ||||||||||||||||
Minesite sustaining capital expenditures | 7 | 235 | 361 | 410 | 714 | ||||||||||||||||
Rehabilitation – accretion and amortization (operating sites) | 5 | 14 | 40 | 25 | 76 | ||||||||||||||||
Non-controlling interest, copper operations and other | 8 | (82 | ) | (90 | ) | (132 | ) | (161 | ) | ||||||||||||
All-in sustaining costs | $ | 1,010 | $ | 1,313 | $ | 1,934 | $ | 2,615 | |||||||||||||
Project exploration and evaluation and project costs | 6 | 47 | 81 | 95 | 158 | ||||||||||||||||
Community relations costs not related to current operations | 3 | 4 | 5 | 7 | |||||||||||||||||
Project capital expenditures | 7 | 49 | 45 | 89 | 139 | ||||||||||||||||
Rehabilitation – accretion and amortization (non-operating sites) | 5 | 3 | 3 | 5 | 6 | ||||||||||||||||
Non-controlling interest and copper operations | 8 | (15 | ) | (11 | ) | (31 | ) | (15 | ) | ||||||||||||
All-in costs | $ | 1,097 | $ | 1,435 | $ | 2,097 | $ | 2,910 | |||||||||||||
Ounces sold – equity basis (000s ounces) | 10 | 1,292 | 1,466 | 2,598 | 2,851 | ||||||||||||||||
Cash costs per ounce1 | $ | 578 | $ | 624 | $ | 565 | $ | 640 | |||||||||||||
Cash costs per ounce (on a co-product basis)1 | 9 | $ | 605 | $ | 648 | $ | 591 | $ | 666 | ||||||||||||
All-in sustaining costs per ounce1 | $ | 782 | $ | 895 | $ | 744 | $ | 918 | |||||||||||||
All-in sustaining costs per ounce (on a co-product basis)1 | 9 | $ | 809 | $ | 919 | $ | 770 | $ | 944 | ||||||||||||
All-in costs per ounce1 | $ | 849 | $ | 978 | $ | 807 | $ | 1,021 | |||||||||||||
All-in costs per ounce (on a co-product basis)1 | 9 | $ | 876 | $ | 1,002 | $ | 833 | $ | 1,047 |
1 | Cash costs per ounce, all-in sustaining costs per ounce and all-in costs per ounce may not calculate based on amounts presented in this table due to rounding. | |
1 | Other sales | |
Revenues include the sale of by-products for our gold and copper mines for the three months ended June 30, 2016 of $32 million (2015: $33 million) and the six months ended June 30, 2016 of $60 million (2015: $74 million) and energy sales from the Monte Rio power plant at our Pueblo Viejo Mine for the three months ended June 30, 2016 of $14 million (2015: $20 million) and the six months ended June 30, 2016 of $24 million (2015: $38 million). | ||
2 | Realized (gains)/losses on hedge and non-hedge derivatives | |
Includes realized hedge losses of $20 million and $44 million (2015: $21 million and $42 million, respectively) for the three and six months ended June 30, 2016, respectively, and realized non-hedge losses of $6 million and $13 million (2015: $6 million and $5 million, respectively) for the three and six months ended June 30, 2016, respectively. Refer to Note 5 of the Financial Statements for further information. | ||
3 | Non-recurring items | |
Non-recurring items consist of $10 million in abnormal costs at Veladero. These costs are not indicative of our cost of production and have been excluded from the calculation of cash costs. | ||
4 | Other | |
Other adjustments include adding the net margins related to power sales at Pueblo Viejo of $2 million and $4 million, respectively, (2015: $5 million and $10 million, respectively) and adding the cost of treatment and refining charges of $4 million and $9 million, respectively (2015: $3 million and $6 million, respectively). 2016 includes the removal of costs associated with our Pierina mine which is mining incidental ounces as it enters closure of $12 million and $28 million, respectively. | ||
5 | Rehabilitation – accretion and amortization | |
Includes depreciation on the assets related to rehabilitation provisions of our gold operations and accretion on the rehabilitation provision of our gold operations, split between operating and non-operating sites. | ||
6 | Exploration and evaluation costs | |
Exploration, evaluation and project expenses are presented as minesite sustaining if it supports current mine operations and project if it relates to future projects. Refer to page 27 of Barrick’s Second Quarter 2016 MD&A. | ||
7 | Capital expenditures | |
Capital expenditures are related to our gold sites only and are presented on a 100 percent accrued basis. They are split between minesite sustaining and project capital expenditures. Project capital expenditures are distinct projects designed to increase the net present value of the mine and are not related to current production. Significant projects in the current year are Arturo and Cortez Lower Zone. Refer to page 26 of Barrick’s Second Quarter 2016 MD&A. | ||
8 | Non-controlling interest and copper operations | |
Removes general & administrative costs of $12 million and $22 million, respectively, for the three and six months ended June 30, 2016 (2015: $14 million and $26 million, respectively), exploration, evaluation and project costs of $4 million and $10 million, respectively (2015: $3 million and $7 million, respectively), rehabilitation costs of $2 million and $3 million, respectively (2015: $3 million and $5 million, respectively) and capital expenditures of $78 million and $129 million, respectively (2015: $79 million and $137 million, respectively) that are related to our copper sites and the non-controlling interest of our Acacia and Pueblo Viejo operating segment and Arturo. In 2016, figures remove the impact of Pierina. | ||
9 | Costs per ounce | |
Amounts presented on a co-product basis remove from cost per ounce calculations the impact of other metal sales (net of non-controlling interest) that are produced as a by-product of our gold production. | ||
10 | Ounces sold – equity basis | |
In 2016, figures remove the impact of Pierina as the mine is currently going through closure. | ||
5 | Comparison based on the total reserves and resources and average overall reserve grade for Goldcorp Inc., Kinross Gold Corporation, Newmont Mining Corporation, and Newcrest Mining Limited, as reported in each of the reserve reports for Goldcorp Inc., Kinross Gold Corporation, Newmont Mining Corporation, and Newcrest Mining Limited as of December 31, 2015. | |
6 | Includes $699 million cash held at Acacia and Pueblo Viejo, which may not be readily deployed outside of Acacia and/or Pueblo Viejo. | |
7 | Amount excludes capital leases and includes project financing payments at Pueblo Viejo (60 percent basis) and Acacia (100 percent basis). | |
8 | Barrick’s share. | |
9 | “C1 cash costs” per pound and “All-in sustaining costs” per pound are non-GAAP financial performance measures. “C1 cash costs” per pound is based on cost of sales but excludes the impact of depreciation and royalties and includes treatment and refinement charges. “All-in sustaining costs” per pound begins with “C1 cash costs” per pound and adds further costs which reflect the additional costs of operating a mine, primarily sustaining capital expenditures, general & administrative costs and royalties. Barrick believes that the use of “C1 cash costs” per pound and “all-in sustaining costs” per pound will assist investors, analysts, and other stakeholders in understanding the costs associated with producing copper, understanding the economics of copper mining, assessing our operating performance, and also our ability to generate free cash flow from current operations and to generate free cash flow on an overall company basis. “C1 cash costs” per pound and “All-in sustaining costs” per pound are intended to provide additional information only, do not have any standardized meaning under IFRS, and may not be comparable to similar measures of performance presented by other companies. These measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Further details on these non-GAAP measures are provided in the MD&A accompanying Barrick’s financial statements filed from time to time on SEDAR at http://www.sedar.com/ and on EDGAR at http://www.sec.gov/. |
Reconciliation of Copper Cost of Sales to C1 cash costs per pound and All-in sustaining costs per pound | |||||||||||||||||
($ millions, except per pound information in dollars) | For the three months ended June 30 | For the six months ended June 30 | |||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Cost of sales | $ | 79 | $ | 238 | $ | 169 | $ | 489 | |||||||||
Depreciation/amortization | (9 | ) | (26 | ) | (20 | ) | (63 | ) | |||||||||
Treatment and refinement charges | 38 | 41 | 84 | 83 | |||||||||||||
Cost of sales applicable to equity method investments1 | 43 | – | 84 | – | |||||||||||||
Less: royalties | (10 | ) | (36 | ) | (25 | ) | (69 | ) | |||||||||
C1 cash cost of sales | $ | 141 | $ | 217 | $ | 292 | $ | 440 | |||||||||
General & administrative costs | 5 | 5 | 12 | 12 | |||||||||||||
Rehabilitation – accretion and amortization | 2 | 2 | 3 | 4 | |||||||||||||
Royalties | 10 | 36 | 25 | 69 | |||||||||||||
Minesite sustaining capital expenditures | 41 | 44 | 70 | 71 | |||||||||||||
All-in sustaining costs | $ | 199 | $ | 304 | $ | 402 | $ | 596 | |||||||||
Pounds sold – consolidated basis (millions pounds) | 93 | 112 | 196 | 233 | |||||||||||||
C1 cash cost per pound2 | $ | 1.52 | $ | 1.94 | $ | 1.49 | $ | 1.89 | |||||||||
All-in sustaining costs per pound2 | $ | 2.14 | $ | 2.72 | $ | 2.05 | $ | 2.56 |
1 | For the three and six month periods ended June 30, 2016, figures include $43 million and $84 million, respectively, of cash costs related to our 50 percent share of Zaldívar due to the divestment of 50 percent of our interest in the mine on December 1, 2015 and subsequent accounting as an equity method investment. | |
2 | C1 cash costs per pound and all-in sustaining costs per pound may not calculate based on amounts presented in this table due to rounding. | |
10 | Barrick’s share on an accrued basis. | |
11 | Operating unit guidance ranges for production reflect expectations at each individual operating unit, but do not add up to corporate-wide guidance range total. | |
12 | We have combined our previous capital expenditure categories of Minesite expansion and Projects into one category called Project. | |
13 | Due to our fuel hedging activities, which are reflected in these sensitivities, we are partially protected against changes in this factor. | |
Key Statistics | |||||||||||||||
Barrick Gold Corporation | |||||||||||||||
(in United States dollars) | Three months ended June 30, | Six months ended June 30, | |||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Financial Results (millions) | |||||||||||||||
Revenues | $ | 2,012 | $ | 2,231 | $ | 3,942 | $ | 4,476 | |||||||
Cost of sales | 1,336 | 1,689 | 2,660 | 3,397 | |||||||||||
Net earnings (loss)1 | 138 | (9 | ) | 55 | 48 | ||||||||||
Adjusted net earnings2 | 158 | 60 | 285 | 122 | |||||||||||
Adjusted EBITDA2 | 885 | 725 | 1,582 | 1,523 | |||||||||||
Total project capital expenditures3 | 50 | 53 | 90 | 157 | |||||||||||
Total capital expenditures – sustaining3 | 234 | 361 | 409 | 713 | |||||||||||
Operating cash flow | 527 | 525 | 978 | 841 | |||||||||||
Free cash flow2 | 274 | 26 | 455 | (172 | ) | ||||||||||
Per Share Data (dollars) | |||||||||||||||
Net earnings (loss) (basic and diluted) | 0.12 | (0.01 | ) | 0.05 | 0.04 | ||||||||||
Adjusted net earnings (basic)2 | 0.14 | 0.05 | 0.24 | 0.10 | |||||||||||
Weighted average basic and diluted common shares (millions) | 1,165 | 1,165 | 1,165 | 1,165 | |||||||||||
Operating Results | |||||||||||||||
Gold production (thousands of ounces)4 | 1,340 | 1,445 | 2,620 | 2,835 | |||||||||||
Gold sold (thousands of ounces)4 | 1,292 | 1,466 | 2,598 | 2,851 | |||||||||||
Per ounce data | |||||||||||||||
Average spot gold price | $ | 1,260 | $ | 1,192 | $ | 1,221 | $ | 1,206 | |||||||
Average realized gold price2 | 1,259 | 1,190 | 1,219 | 1,204 | |||||||||||
All-in sustaining costs2 | 782 | 895 | 744 | 918 | |||||||||||
Copper production (millions of pounds)5 | 103 | 115 | 214 | 233 | |||||||||||
Copper sold (millions of pounds) | 93 | 112 | 196 | 233 | |||||||||||
Per pound data | |||||||||||||||
Average spot copper price | $ | 2.14 | $ | 2.74 | $ | 2.13 | $ | 2.69 | |||||||
Average realized copper price2 | 2.14 | 2.66 | 2.16 | 2.60 | |||||||||||
All-in sustaining costs2 | 2.14 | 2.72 | 2.05 | 2.56 | |||||||||||
As at June 30, |
As at December 31, |
||||||||||||||
2016 | 2015 | ||||||||||||||
Financial Position (millions) | |||||||||||||||
Cash and equivalents | $ | 2,441 | $ | 2,455 | |||||||||||
Working capital (excluding cash) | 1,344 | 1,310 |
1 | Net earnings (loss) represents net earnings attributable to the equity holders of the Company. | |
2 | Realized price, all-in sustaining costs, adjusted net earnings, adjusted EBITDA and free cash flow are non-GAAP financial performance measures with no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. For further information and a detailed reconciliation of each non-GAAP measure to the most directly comparable IFRS measure, please see pages 42 – 49 of this MD&A. | |
3 | Amounts presented on a 100% accrued basis. Project capital expenditures are included in our calculation of all-in costs, but not included in our calculation of all-in sustaining costs. | |
4 | Production includes Acacia on a 63.9% basis and Pueblo Viejo on a 60% basis, both of which reflect our equity share of production. Also includes production from Bald Mountain and Round Mountain up to January 11, 2016, the effective date of sale of the assets. 2015 includes production from Porgera on a 95% basis whereas 2016 figures are on a 47.5% basis reflecting the sale of 50% of Porgera in third quarter 2015. Sales include our equity share of gold sales from Acacia and Pueblo Viejo. | |
5 | In 2016, reflects production from Jabal Sayid and Zaldívar on a 50% basis, which reflects our equity share of production, and 100% of Lumwana. 2015 production includes Zaldívar on a 100% basis prior to the sale of 50% of the mine in fourth quarter 2015, and 100% of Lumwana. | |
Production and Cost Summary |
Gold Production (attributable ounces) (000s) |
Gold Cost of Sales (in millions of USD) |
All-in sustaining costs5 ($/oz) |
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June 30, | June 30, | June 30, | June 30, | June 30, | June 30, | |||||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||
Gold | ||||||||||||||||||||||||||||||||
Goldstrike | 263 | 206 | 512 | 413 | $ | 219 | $ | 113 | $ | 431 | $ | 262 | $ | 737 | $ | 732 | 722 | $ | 811 | |||||||||||||
Cortez | 248 | 193 | 495 | 326 | 239 | 195 | 491 | 391 | 558 | 811 | 511 | 877 | ||||||||||||||||||||
Pueblo Viejo1 | 150 | 131 | 322 | 266 | 173 | 224 | 340 | 455 | 634 | 682 | 559 | 673 | ||||||||||||||||||||
Lagunas Norte | 124 | 155 | 224 | 333 | 77 | 103 | 145 | 202 | 585 | 509 | 571 | 483 | ||||||||||||||||||||
Veladero | 119 | 151 | 251 | 300 | 100 | 110 | 205 | 238 | 744 | 961 | 709 | 978 | ||||||||||||||||||||
Turquoise Ridge | 79 | 52 | 129 | 101 | 34 | 37 | 69 | 68 | 621 | 780 | 668 | 747 | ||||||||||||||||||||
Acacia2 | 141 | 119 | 263 | 235 | 180 | 187 | 349 | 361 | 926 | 1,149 | 941 | 1,133 | ||||||||||||||||||||
Other Mines – Gold3 | 216 | 438 | 424 | 861 | 205 | 444 | 400 | 861 | 786 | 950 | 775 | 977 | ||||||||||||||||||||
Total | 1,340 | 1,445 | 2,620 | 2,835 | $ | 1,227 | $ | 1,413 | $ | 2,430 | $ | 2,838 | $ | 782 | $ | 895 | $ | 744 | $ | 918 |
Copper Production (attributable pounds)4 (millions) |
Copper Cost of Sales (in millions of USD) |
All-in sustaining costs5 ($/lb) |
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June 30, | June 30, | June 30, | June 30, | June 30, | June 30, | ||||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||
Total | 103 | 115 | 214 | 233 | $ | 79 | $ | 238 | $ | 169 | $ | 489 | $ | 2.14 | $ | 2.72 | $ | 2.05 | $ | 2.56 |
Total Gold Costs ($/oz) | |||||||||||||
Three months ended | Six months ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||
Direct mining costs before impact of hedges at market foreign exchange rates | $ | 550 | $ | 601 | $ | 538 | $ | 618 | |||||
Losses realized on currency hedge and commodity hedge/economic hedge contracts | 20 | 15 | 21 | 14 | |||||||||
By-product credits | (27 | ) | (24 | ) | (26 | ) | (26 | ) | |||||
Royalties | 35 | 32 | 32 | 34 | |||||||||
Cash costs5 | 578 | 624 | 565 | 640 | |||||||||
Depreciation | 253 | 231 | 253 | 234 | |||||||||
Total production costs | $ | 831 | $ | 855 | $ | 818 | $ | 874 | |||||
Cash costs5 | $ | 578 | $ | 624 | $ | 565 | $ | 640 | |||||
General & administrative costs | 68 | 48 | 56 | 48 | |||||||||
Rehabilitation – accretion and amortization (operating sites) | 11 | 27 | 10 | 27 | |||||||||
Mine on-site exploration and evaluation costs | 7 | 11 | 6 | 9 | |||||||||
Minesite sustaining capital expenditures | 182 | 246 | 158 | 250 | |||||||||
Non-controlling interest, copper operations and other | (64) | (61) | (51) | (56) | |||||||||
All-in sustaining costs5 | $ | 782 | $ | 895 | $ | 744 | $ | 918 | |||||
All-in costs5 | $ | 849 | $ | 978 | $ | 807 | $ | 1,021 |
1 | Reflects production from Pueblo Viejo on a 60% basis, which reflects our equity share of production. | |
2 | Reflects production from Acacia on a 63.9% basis, which reflects our equity share of production. | |
3 | In 2016, Other Mines – Gold includes Golden Sunlight, Hemlo, Porgera on a 47.5% basis and Kalgoorlie. Also includes production from Bald Mountain and Round Mountain up to January 11, 2016, the effective date of sale of these assets. In 2015, Other Mines – Gold included Bald Mountain, Round Mountain, Golden Sunlight, Hemlo, Pierina, Cowal, Ruby Hill, Porgera on a 95% basis, and Kalgoorlie. | |
4 | In 2016, reflects production from Jabal Sayid and Zaldívar on a 50% basis, which reflects our equity share of production, and 100% of Lumwana. 2015 production includes Zaldívar on a 100% basis prior to the sale of 50% of the mine in fourth quarter 2015, and 100% of Lumwana. | |
5 | Cash costs, all-in sustaining costs, and all-in costs are non-GAAP financial performance measures with no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. For further information and a detailed reconciliation of each non-GAAP measure to the most directly comparable IFRS measure, please see pages 42 – 49 of this MD&A. | |
Consolidated Statements of Income | |||||||||||||||||
Barrick Gold Corporation | |||||||||||||||||
(in millions of United States dollars, except per share data) (Unaudited) | Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Revenue (notes 5 and 6) | $ | 2,012 | $ | 2,231 | $ | 3,942 | $ | 4,476 | |||||||||
Costs and expenses (income) | |||||||||||||||||
Cost of sales (notes 5 and 7) | 1,336 | 1,689 | 2,660 | 3,397 | |||||||||||||
General and administrative expenses | 88 | 70 | 146 | 137 | |||||||||||||
Exploration, evaluation and project expenses | 56 | 97 | 111 | 183 | |||||||||||||
Impairment charges | 4 | 35 | 5 | 40 | |||||||||||||
Loss on currency translation (note 9B) | 23 | 33 | 162 | 31 | |||||||||||||
Closed mine rehabilitation | 7 | (19 | ) | 30 | (11 | ) | |||||||||||
Income from equity investees | (3 | ) | – | (8 | ) | – | |||||||||||
(Gain) loss on non-hedge derivatives | 1 | 8 | (3 | ) | 11 | ||||||||||||
Other expense (income) (note 9A) | (11 | ) | 32 | 3 | 14 | ||||||||||||
Income before finance costs and income taxes | $ | 511 | $ | 286 | $ | 836 | $ | 674 | |||||||||
Finance costs, net | (162 | ) | (192 | ) | (373 | ) | (386 | ) | |||||||||
Income before income taxes | $ | 349 | $ | 94 | $ | 463 | $ | 288 | |||||||||
Income tax expense (note 10) | (173 | ) | (103 | ) | (359 | ) | (208 | ) | |||||||||
Net income (loss) | $ | 176 | $ | (9 | ) | $ | 104 | $ | 80 | ||||||||
Attributable to: | |||||||||||||||||
Equity holders of Barrick Gold Corporation | $ | 138 | $ | (9 | ) | $ | 55 | $ | 48 | ||||||||
Non-controlling interests (note 15) | $ | 38 | $ | – | $ | 49 | $ | 32 | |||||||||
Earnings (loss) per share data attributable to the equity holders of Barrick Gold Corporation (note 8) | |||||||||||||||||
Net income (loss) | |||||||||||||||||
Basic | $ | 0.12 | $ | (0.01 | ) | $ | 0.05 | $ | 0.04 | ||||||||
Diluted | $ | 0.12 | $ | (0.01 | ) | $ | 0.05 | $ | 0.04 | ||||||||
The notes to these unaudited condensed interim financial statements, which are contained in the Second Quarter Report 2016 available on our website are an integral part of these consolidated financial statements. | |||||||||||||||||
Consolidated Statements of Comprehensive Income | ||||||||||||||
Barrick Gold Corporation | ||||||||||||||
(in millions of United States dollars) (Unaudited) | Three months ended | Six months ended | ||||||||||||
June 30, | June 30, | |||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||
Net income (loss) | $ | 176 | $ | (9 | ) | $ | 104 | $ | 80 | |||||
Other comprehensive income (loss), net of taxes | ||||||||||||||
Movement in equity investments fair value reserve: | ||||||||||||||
Net unrealized change on equity investments, net of tax $nil, $nil, $nil and $nil | 10 | (6 | ) | 11 | (11 | ) | ||||||||
Net realized change on equity investments, net of tax $nil, $nil, $nil and $nil | – | 1 | – | 18 | ||||||||||
Items that may be reclassified subsequently to profit or loss: | ||||||||||||||
Unrealized gains (losses) on derivatives designated as cash flow hedges, net of tax ($8), ($13), ($7) and $1 | 22 | 24 | 12 | (33 | ) | |||||||||
Realized losses on derivatives designated as cash flow hedges, net of tax ($2), $1, ($4) and $nil | 18 | 36 | 36 | 51 | ||||||||||
Currency translation adjustments, net of tax $nil, $nil, $nil and $nil | 2 | 2 | 93 | (30 | ) | |||||||||
Total other comprehensive income (loss) | 52 | 57 | 152 | (5 | ) | |||||||||
Total comprehensive income | $ | 228 | $ | 48 | $ | 256 | $ | 75 | ||||||
Attributable to: | ||||||||||||||
Equity holders of Barrick Gold Corporation | $ | 190 | $ | 48 | $ | 207 | $ | 43 | ||||||
Non-controlling interests | $ | 38 | $ | – | $ | 49 | $ | 32 | ||||||
The notes to these unaudited condensed interim financial statements, which are contained in the Second Quarter Report 2016 available on our website are an integral part of these consolidated financial statements. | ||||||||||||||
Consolidated Statements of Cash Flow | ||||||||||||||||||
Barrick Gold Corporation | ||||||||||||||||||
(in millions of United States dollars) (Unaudited) | Three months ended | Six months ended | ||||||||||||||||
June 30, | June 30, | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
OPERATING ACTIVITIES | ||||||||||||||||||
Net income (loss) | $ | 176 | $ | (9 | ) | $ | 104 | $ | 80 | |||||||||
Adjusted for the following items: | ||||||||||||||||||
Depreciation | 382 | 419 | 767 | 840 | ||||||||||||||
Finance costs | 165 | 194 | 380 | 390 | ||||||||||||||
Impairment charges | 4 | 35 | 5 | 40 | ||||||||||||||
Income tax expense (note 10) | 173 | 103 | 359 | 208 | ||||||||||||||
(Gain) loss on non-hedge derivatives | 1 | 8 | (3 | ) | 11 | |||||||||||||
Gain on sale of long-lived assets | (11 | ) | (2 | ) | (2 | ) | (26 | ) | ||||||||||
Change in working capital (note 11) | (167 | ) | 40 | (350 | ) | (235 | ) | |||||||||||
Other operating activities (note 11) | 133 | 40 | 232 | 82 | ||||||||||||||
Operating cash flows before interest and income taxes | 856 | 828 | 1,492 | 1,390 | ||||||||||||||
Interest paid | (201 | ) | (274 | ) | (268 | ) | (349 | ) | ||||||||||
Income taxes paid | (128 | ) | (29 | ) | (246 | ) | (200 | ) | ||||||||||
Net cash provided by operating activities | 527 | 525 | 978 | 841 | ||||||||||||||
INVESTING ACTIVITIES | ||||||||||||||||||
Property, plant and equipment | ||||||||||||||||||
Capital expenditures (note 5) | (253 | ) | (499 | ) | (523 | ) | (1,013 | ) | ||||||||||
Sales proceeds | 6 | 7 | 10 | 19 | ||||||||||||||
Divestitures (note 4) | (22 | ) | – | 588 | 2 | |||||||||||||
Investments sales | – | – | – | 33 | ||||||||||||||
Other investing activities | (3 | ) | (6 | ) | (6 | ) | (7 | ) | ||||||||||
Net cash (used in) provided by investing activities | (272 | ) | (498 | ) | 69 | (966 | ) | |||||||||||
FINANCING ACTIVITIES | ||||||||||||||||||
Debt | ||||||||||||||||||
Proceeds | – | 3 | 3 | 5 | ||||||||||||||
Repayments | (127 | ) | (88 | ) | (980 | ) | (272 | ) | ||||||||||
Dividends | (21 | ) | (58 | ) | (43 | ) | (116 | ) | ||||||||||
Funding from non-controlling interests | 14 | 21 | 27 | 22 | ||||||||||||||
Disbursements to non-controlling interests | – | (20 | ) | (31 | ) | (64 | ) | |||||||||||
Debt extinguishment costs | (3 | ) | – | (40 | ) | – | ||||||||||||
Net cash used in financing activities | (137 | ) | (142 | ) | (1,064 | ) | (425 | ) | ||||||||||
Effect of exchange rate changes on cash and equivalents | – | (1 | ) | 3 | (7 | ) | ||||||||||||
Net increase (decrease) in cash and equivalents | 118 | (116 | ) | (14 | ) | (557 | ) | |||||||||||
Cash and equivalents at the beginning of period | 2,323 | 2,258 | 2,455 | 2,699 | ||||||||||||||
Cash and equivalents at the end of period | $ | 2,441 | $ | 2,142 | $ | 2,441 | $ | 2,142 | ||||||||||
Less: cash and equivalents of assets classified as held for sale at the end of period | – | 20 | – | 20 | ||||||||||||||
Cash and equivalents excluding assets classified as held for sale at the end of period | $ | 2,441 | $ | 2,122 | $ | 2,441 | $ | 2,122 | ||||||||||
The notes to these unaudited condensed interim financial statements, which are contained in the Second Quarter Report 2016 available on our website are an integral part of these consolidated financial statements. | ||||||||||||||||||
Consolidated Balance Sheets | |||||||||
Barrick Gold Corporation | |||||||||
(in millions of United States dollars) (Unaudited) | As at June 30, |
As at December 31, |
|||||||
2016 | 2015 | ||||||||
ASSETS | |||||||||
Current assets | |||||||||
Cash and equivalents (note 12A) | $ | 2,441 | $ | 2,455 | |||||
Accounts receivable | 491 | 275 | |||||||
Inventories | 1,701 | 1,717 | |||||||
Other current assets | 239 | 263 | |||||||
Total current assets (excluding assets classified as held for sale) | $ | 4,872 | $ | 4,710 | |||||
Assets classified as held for sale | – | 758 | |||||||
Total current assets | $ | 4,872 | $ | 5,468 | |||||
Non-current assets | |||||||||
Equity in investees | 1,218 | 1,199 | |||||||
Property, plant and equipment | 14,284 | 14,434 | |||||||
Goodwill | 1,371 | 1,371 | |||||||
Intangible assets | 269 | 271 | |||||||
Deferred income tax assets | 1,016 | 1,040 | |||||||
Non-current portion of inventory | 1,566 | 1,502 | |||||||
Other assets | 1,008 | 1,023 | |||||||
Total assets | $ | 25,604 | $ | 26,308 | |||||
LIABILITIES AND EQUITY | |||||||||
Current liabilities | |||||||||
Accounts payable | $ | 1,120 | $ | 1,158 | |||||
Debt (note 12B) | 175 | 203 | |||||||
Current income tax liabilities | 124 | – | |||||||
Other current liabilities | 301 | 337 | |||||||
Total current liabilities (excluding liabilities classified as held for sale) | $ | 1,720 | $ | 1,698 | |||||
Liabilities classified as held for sale | – | 149 | |||||||
Total current liabilities | $ | 1,720 | $ | 1,847 | |||||
Non-current liabilities | |||||||||
Debt (note 12B) | 8,825 | 9,765 | |||||||
Provisions | 2,343 | 2,102 | |||||||
Deferred income tax liabilities | 1,502 | 1,553 | |||||||
Other liabilities | 1,554 | 1,586 | |||||||
Total liabilities | $ | 15,944 | $ | 16,853 | |||||
Equity | |||||||||
Capital stock (note 14) | $ | 20,873 | $ | 20,869 | |||||
Deficit | (13,634 | ) | (13,642 | ) | |||||
Accumulated other comprehensive loss | (218 | ) | (370 | ) | |||||
Other | 321 | 321 | |||||||
Total equity attributable to Barrick Gold Corporation shareholders | $ | 7,342 | $ | 7,178 | |||||
Non-controlling interests (note 15) | 2,318 | 2,277 | |||||||
Total equity | $ | 9,660 | $ | 9,455 | |||||
Contingencies and commitments (notes 5 and 16) | |||||||||
Total liabilities and equity | $ | 25,604 | $ | 26,308 | |||||
The notes to these unaudited condensed interim financial statements, which are contained in the Second Quarter Report 2016 available on our website are an integral part of these consolidated financial statements. | |||||||||
Consolidated Statements of Changes in Equity | ||||||||||||||||||||||||||||||
Barrick Gold Corporation | Attributable to equity holders of the company | |||||||||||||||||||||||||||||
(in millions of United States dollars) (Unaudited) | Common Shares (in thousands) | Capital stock | Retained deficit | Accumulated other comprehensive income (loss)1 | Other2 | Total equity attributable to shareholders | Non-controlling interests | Total equity | ||||||||||||||||||||||
At January 1, 2016 | 1,165,081 | $ | 20,869 | $ | (13,642 | ) | $ | (370 | ) | $ | 321 | $ | 7,178 | $ | 2,277 | $ | 9,455 | |||||||||||||
Net income | – | – | 55 | – | – | 55 | 49 | 104 | ||||||||||||||||||||||
Total other comprehensive income | – | – | – | 152 | – | 152 | – | 152 | ||||||||||||||||||||||
Total comprehensive income | – | – | 55 | 152 | – | 207 | 49 | 256 | ||||||||||||||||||||||
Transactions with owners | ||||||||||||||||||||||||||||||
Dividends | – | – | (43 | ) | – | – | (43 | ) | – | (43 | ) | |||||||||||||||||||
Funding from non-controlling interests | – | – | – | – | – | – | 27 | 27 | ||||||||||||||||||||||
Other decrease in non-controlling interest | – | – | – | – | – | – | (35 | ) | (35 | ) | ||||||||||||||||||||
Dividend reinvestment plan (note 14) | 250 | 4 | (4 | ) | – | – | – | – | – | |||||||||||||||||||||
Total transactions with owners | 250 | 4 | (47 | ) | – | – | (43 | ) | (8 | ) | (51 | ) | ||||||||||||||||||
At June 30, 2016 | 1,165,331 | $ | 20,873 | $ | (13,634 | ) | $ | (218 | ) | $ | 321 | $ | 7,342 | $ | 2,318 | $ | 9,660 | |||||||||||||
At January 1, 2015 | 1,164,670 | $ | 20,864 | $ | (10,640 | ) | $ | (298 | ) | $ | 321 | $ | 10,247 | $ | 2,615 | $ | 12,862 | |||||||||||||
Net income | – | – | 48 | – | – | 48 | 32 | 80 | ||||||||||||||||||||||
Total other comprehensive loss | – | – | – | (5 | ) | – | (5 | ) | – | (5 | ) | |||||||||||||||||||
Total comprehensive income (loss) | – | – | 48 | (5 | ) | – | 43 | 32 | 75 | |||||||||||||||||||||
Transactions with owners | ||||||||||||||||||||||||||||||
Dividends | – | – | (116 | ) | – | – | (116 | ) | – | (116 | ) | |||||||||||||||||||
Recognition of stock option expense | – | 1 | – | – | – | 1 | – | 1 | ||||||||||||||||||||||
Funding from non-controlling interests | – | – | – | – | – | – | 22 | 22 | ||||||||||||||||||||||
Other decrease in non-controlling interests | – | – | – | – | – | – | (66 | ) | (66 | ) | ||||||||||||||||||||
Other decreases | – | – | (6 | ) | – | – | (6 | ) | – | (6 | ) | |||||||||||||||||||
Total transactions with owners | – | 1 | (122 | ) | – | – | (121 | ) | (44 | ) | (165 | ) | ||||||||||||||||||
At June 30, 2015 | 1,164,670 | $ | 20,865 | $ | (10,714 | ) | $ | (303 | ) | $ | 321 | $ | 10,169 | $ | 2,603 | $ | 12,772 |
1 | Includes cumulative translation losses at June 30, 2016: $85 million (June 30, 2015: $152 million). | |
2 | Includes additional paid-in capital as at June 30, 2016: $283 million (December 31, 2015: $283 million; June 30, 2015: $283 million) and convertible borrowings – equity component as at June 30, 2016: $38 million (December 31, 2015: $38 million; June 30, 2015: $38 million). | |
The notes to these unaudited condensed interim financial statements, which are contained in the Second Quarter Report 2016 available on our website are an integral part of these consolidated financial statements. | ||
HEAD OFFICE | TRANSFER AGENTS AND REGISTRARS |
Barrick Gold Corporation | CST Trust Company |
Brookfield Place | P.O. Box 700, Postal Station B |
TD Canada Trust Tower | Montreal, Quebec H3B 3K3 |
161 Bay Street, Suite 3700 | or |
Toronto, Ontario M5J 2S1 | American Stock Transfer & Trust Company, LLC |
Telephone: +1 416 861-9911 | 6201 – 15 Avenue |
Toll-free: 1-800-720-7415 | Brooklyn, New York 11219 |
Fax: +1 416 861-2492 | |
Email: investor@barrick.com | Telephone: 1-800-387-0825 |
Website: www.barrick.com | Fax: 1-888-249-6189 |
SHARES LISTED | Email: inquiries@canstockta.com |
ABX – The New York Stock Exchange | Website: www.canstockta.com |
The Toronto Stock Exchange | |
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information contained or incorporated by reference in this Second Quarter Report 2016, including any information as to our strategy, projects, plans or future financial or operating performance, constitutes “forward-looking statements”. All statements, other than statements of historical fact, are forward-looking statements. The words “believe”, “expect”, “anticipate”, “contemplate”, “target”, “plan”, “objective”, “aspiration”, “aim”, “intend”, “project”, “goal”, “continue”, “budget”, “estimate”, “potential”, “may”, “will”, “can”, “should”, “could”, “would”, and similar expressions identify forward-looking statements. In particular, this Second Quarter Report 2016 contains forward-looking statements including, without limitation, with respect to: (i) Barrick’s forward-looking production guidance; (ii) estimates of future cost of sales for gold and copper; all-in-sustaining costs per ounce/pound, cash costs per ounce and C1 cash costs per pound; (iii) cash flow forecasts; (iv) projected capital, operating and exploration expenditures; (v) targeted debt and cost reductions; (vi) targeted investments by Barrick’s Growth Group; (vii) mine life and production rates; (viii) potential mineralization and metal or mineral recoveries; (ix) Barrick’s Best-in-Class program (including potential improvements to financial and operating performance at Barrick’s Pueblo Viejo and Goldstrike mines that may result from certain Best-in-Class initiatives); (x) timing and completion of acquisitions; (xi) non-core asset sales or joint ventures; and (xii) expectations regarding future price assumptions, financial performance and other outlook or guidance.
Forward-looking statements are necessarily based upon a number of estimates and assumptions; including material estimates and assumptions related to the factors set forth below that, while considered reasonable by the company as at the date of this press release in light of management’s experience and perception of current conditions and expected developments, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements and undue reliance should not be placed on such statements and information. Such factors include, but are not limited to: fluctuations in the spot and forward price of gold, copper or certain other commodities (such as silver, diesel fuel, natural gas and electricity); the speculative nature of mineral exploration and development; changes in mineral production performance, exploitation and exploration successes; risks associated with the fact that certain Best-in-Class initiatives are still in the early stages of evaluation and additional engineering and other analysis is required to fully assess their impact; diminishing quantities or grades of reserves; increased costs, delays, suspensions and technical challenges associated with the construction of capital projects; operating or technical difficulties in connection with mining or development activities, including geotechnical challenges and disruptions in the maintenance or provision of required infrastructure and information technology systems; failure to comply with environmental and health and safety laws and regulations; timing of receipt of, or failure to comply with, necessary permits and approvals; uncertainty whether some or all of the Best-in-Class initiatives and investments targeted by the Growth Group will meet the company’s capital allocation objectives; the impact of global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future cash flows; adverse changes in our credit ratings; the impact of inflation; fluctuations in the currency markets;
changes in U.S. dollar interest rates; risks arising from holding derivative instruments; changes in national and local government legislation, taxation, controls or regulations and/or changes in the administration of laws, policies and practices, expropriation or nationalization of property and political or economic developments in Canada, the United States and other jurisdictions in which the company does or may carry on business in the future; lack of certainty with respect to foreign legal systems, corruption and other factors that are inconsistent with the rule of law; damage to the company’s reputation due to the actual or perceived occurrence of any number of events, including negative publicity with respect to the company’s handling of environmental matters or dealings with community groups, whether true or not; risk of loss due to acts of war, terrorism, sabotage and civil disturbances; litigation; contests over title to properties, particularly title to undeveloped properties, or over access to water, power and other required infrastructure; business opportunities that may be presented to, or pursued by, the company; our ability to successfully integrate acquisitions or complete divestitures; risks associated with working with partners in jointly controlled assets; employee relations including loss of key employees; increased costs and physical risks, including extreme weather events and resource shortage, related to climate change; availability and increased costs associated with mining inputs and labor; and the organization of our previously held African gold operations and properties under a separate listed company. In addition, there are risks and hazards associated with the business of mineral exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion, copper cathode or gold or copper concentrate losses (and the risk of inadequate insurance, or inability to obtain insurance, to cover these risks).
Many of these uncertainties and contingencies can affect our actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements are not guarantees of future performance. All of the forward-looking statements made in this Second Quarter Report 2016 are qualified by these cautionary statements. Specific reference is made to the most recent Form 40-F/Annual Information Form on file with the SEC and Canadian provincial securities regulatory authorities for a more detailed discussion of some of the factors underlying forward-looking statements and the risks that may affect Barrick’s ability to achieve the expectations set forth in the forward-looking statements contained in this press release.
The company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.