Barrick's Gold Production Increased To 1.95 Million Ounces

TORONTO, ON - Barrick Gold's three most advanced projects are expected to contribute about 1.9 million ounces of average annual production in their first full five years at lower cash costs than the Company's current cost profile. Construction of the Buzwagi project in Tanzania is about 80% complete and within its pre-production capital budget of $400 million. First gold is anticipated on schedule in mid-2009.
The Cortez Hills project in Nevada remains on track with an initial capital budget of about $500 million, which is in line with the original estimate. Approximately 60% of funds have been committed or spent and the receipt of the Record of Decision (ROD) is anticipated before year-end. Production is expected in the first half of 2010.
In the Dominican Republic, the Pueblo Viejo project is about six months into an expected three and a half year construction period with significant progress being made on the demolition of historical facilities and site preparation work. The project is tracking within its $2.7 billion (100% basis) pre-production capital budget.
At Pascua-Lama, the majority of remaining key sectoral permits, including water rights, have been granted by the government of San Juan province in Argentina. Progress was also made on certain fiscal matters at the federal level in Argentina; however, the resolution of cross-border taxation between Chile and Argentina remains outstanding.
Based on positive results from the drill program at the North High Grade Bullion zone discovery at Turquoise Ridge in Humboldt County, Nevada, the current 1,500 foot drift will be extended an additional 1,000 feet to further test the extent of the high grade mineralization outlined to date. Results from the current underground program continue to confirm the multi-million ounce potential of the zone.
The Company expects 2008 gold production to be within its original guidance range at 7.6-7.8 million ounces. Expected total cash costs for the year continue to be in the range of $425-$445 per ounce.
As previously indicated with second quarter results, total cash costs per ounce were higher this quarter, with more production coming from the North America and Australia Pacific regions and less production from the lower cost South America region. Higher production and lower cash costs are expected in the fourth quarter, compared to Q3.
The North American business unit increased production to 0.78 million ounces in Q3, largely due to the Goldstrike operation, at total cash costs of $499 per ounce. Goldstrike produced 0.46 million ounces at cash costs of $439 per ounce as a result of transitioning to higher grade ore now that the waste stripping phase is completed. Performance of the North America region is expected to improve further in Q4 with both the Goldstrike and Cortez operations expecting their strongest production quarters of the year.
The South American business unit produced 0.52 million ounces of gold in Q3 at total cash costs of $265 per ounce. The Lagunas Norte mine continued to deliver outstanding results, producing 0.35 million ounces of gold at total cash costs of only $126 per ounce. With year-to-date production of 0.85 million ounces at cash costs of $126 per ounce, the operation is on track to deliver over 1.0 million ounces in 2008 for the third straight year. Veladero's production of 94,000 ounces at higher cash costs was largely the result of sequencing through lower grade material during the quarter. Year-to-date production of 0.45 million ounces is almost a 50% increase from the prior year period as a result of higher grades, enhanced productivity and better equipment utilization and availability. A crusher expansion to increase throughput from 50,000 to 85,000 tonnes per day is underway and is expected to increase production capacity once completed in the second half of 2009.
Australia Pacific production of 0.50 million ounces increased largely as a result of higher production from Porgera, Kanowna, Kalgoorlie and Cowal. These higher production levels are expected to be sustained in Q4 but at lower cash costs than the $608 per ounce recorded in Q3. Improved performancesare expected at a number of mines including Cowal where accelerated east wall remediation work remains on track to be completed in Q4, at which time higher grade ore is expected to be released.
Production from the African business unit was 0.14 million ounces in Q3 at total cash costs of $614 per ounce. The Bulyanhulu mine is expected to show improvement moving forward with the progressive ramp-up of underground development and training of the workforce following the illegal strike in late 2007.
Q3 copper production of 87 million pounds is expected to increase in Q4 as Zaldivar's remaining acid requirements for 2008 have been secured. Copper cash costs in Q3 reflect higher electricity and labor costs at Zaldivar, where new contracts came into effect in July. The recent decline in oil prices is expected to provide some relief from escalating energy prices. Barrick expects 2008 cash costs of about $1.25 per pound, which is in line with the original guidance range. The Company now expects 2008 production of 360-370 million pounds due to the effects from acid supply shortages earlier in the year. The Company is fully hedged for the rest of 2008 and for 2009 with an average floor price of just over $3.00 per pound.
Barrick reported Q3 production of 1.95 million ounces of gold at a cash margin of $406 per ounce compared to 1.93 million ounces produced at a cash margin of $316 per ounce for the prior year period. The realized gold price increased by $191 per ounce to $872 per ounce, significantly outpacing increases in cash costs.
Barrick reported third quarter net income of $254 million ($0.29 per share) and operating cash flow of $542 million ($0.62 per share). Reported net income included special items of $97 million ($0.11 per share) for impairment charges relating to Barrick's interest in Highland Gold and certain other portfolio investments. Excluding these items, net income was $351 million ($0.40 per share) compared to net income of $345 million ($0.40 per share) in the prior year period. Q3 net income was also impacted by the timing of gold shipments, with gold production exceeding sales by 136,000 ounces for the quarter.
The company's address is 161 Bay Street, Suite 3700, P.O. Box 212, Toronto  M5J 2S1, (416) 861-9911, fax: (416) 861-2492.