Barrick Reports Q1 2011 Financial Operating Results
TORONTO, ON - Barrick Gold Corporation reported net earnings rose 22% to $1.0 billion from $820 million in the prior year period. Q1 adjusted net earnings increased 32% to $1.0 billion from $763 million in Q1 2010, reflecting higher realized prices for both gold and copper and better than expected total gold cash costs. This results in an annualized return on equity of about 20%. Operating cash flow increased 27% to $1.44 billion from $1.13 billion in the same prior year period.
Q1 gold production of 1.96 million ounces at total cash costs of $437 per ounce and net cash costs of $308 per ounce was ahead of plan primarily as a result of higher production from the Cortez, Goldstrike and Veladero mines. The Company is on track to meet its 2011 guidance of 7.6-8.0 million ounces at total cash costs of $450-$480 per ounce or net cash costs of $340-$380 per ounce, positioning Barrick as one of the lowest cost senior gold producers.
"First quarter operating results exceeded our expectations and combined with strong metal prices and good cost control, resulted in significant growth in earnings and operating cash flow," said Aaron Regent, President and CEO. "The newly expanded Cortez mine made an outstanding contribution and is on track to deliver a full year of low cost production of over 1.3 million ounces in 2011. We look forward to adding new low cost production from Pueblo Viejo and Pascua-Lama as we target nine million ounces of annual gold production. The North America region performed ahead of plan in Q1, producing 0.86 million ounces at total cash costs of $396 per ounce primarily due to higher production from Cortez and Goldstrike. Cortez production of 0.37 million ounces at total cash costs of $220 per ounce in Q1 exceeded plan on higher than budgeted grades from Cortez Hills. In March, the federal Bureau of Land Management issued a Record of Decision approving the Supplementary Environmental Impact Statement for Cortez Hills effective March 15, 2011, which enabled the operation to immediately revert to its original scope. The Goldstrike operation performed strongly in Q1, producing 0.29 million ounces at total cash costs of $461 per ounce on higher than expected grades from the open pit and underground mines. Full year 2011 production for the North America region is 3.30-3.46 million ounces at total cash costs of $425-$450 per ounce. The South American business unit also performed ahead of plan, with production of 0.50 million ounces at total cash costs of $340 per ounce in Q1. The Veladero mine produced 0.27 million ounces at total cash costs of $312 per ounce in Q1 due to a higher than planned drawdown of leach pad inventory. The Lagunas Norte operation contributed 0.19 million ounces at total cash costs of $282 per ounce in line with expectations. In 2011, South America production is expected to be 1.80-1.935 million ounces at total cash costs of $350-$380 per ounce. The Australia Pacific business unit produced 0.46 million ounces at total cash costs of $585 per ounce in Q1. The Porgera mine produced 0.13 million ounces at total cash costs of $476 per ounce. Production from Porgera was impacted by pit wall remediation activities and heavy rainfall which restricted access to the higher grade ore during the quarter. Australia Pacific is expected to produce 1.85-2.00 million ounces at total cash costs of $610-$635 per ounce in 2011. Attributable production from African Barrick Gold plc in Q1 was 0.13 million ounces at total cash costs of $658 per ounce. Barrick's share of 2011 production is expected to be 0.515-0.560 million ounces at total cash costs of $590-$650 per ounce. Q1 copper production of 75 million pounds at total cash costs of $1.25 per pound was in line with expectations. Barrick has secured contracts for essentially all of its sulfuric acid supply required in 2011 at prices well below the current market price. Utilizing option collar strategies, the Company has put in place floor protection at an average price of about $3.00 per pound on approximately 60% of the remaining expected 2011 production and can participate in upside up to an average ceiling price of about $4.89 per pound on approximately 70% of the expected remaining 2011 production. Exploration activities in 2011 are ramping up with some early indications of positive results in North and South America. The 2011 exploration budget has been increased by more than 50% to $320-$340 million from the prior year actual spend following a successful 2010 program that replaced gold reserves and increased measured and indicated gold resources by 24% and inferred resources by 18%. The budget is weighted towards near-term resource additions and conversion at existing mines while still providing support for earlier stage exploration in operating districts and other emerging areas. North America is expected to be allocated about 43% of the total budget, the majority of which is targeted for Nevada. About 24% is expected to be spent in the Australia Pacific region. Approximately 15% is targeted for the South America region with the remainder divided between Africa and other emerging areas. The company's address is 161 Bay Street, Suite 3700, P.O. Box 212?Toronto, ON M5J 2S1, 416-861-9911, fax: 416-861-2492.