Barrick Earns $371 Million In First Quarter

 

TORONTO - Barrick Gold’s Q1 production was 1.76 million ounces of gold at net cash costs of $404 per ounce (applying credit for non-gold sales) or total cash costs of $484 per ounce, in line with plan. Removing the effects of the Company's oil and foreign exchange hedges, cash costs would have been $45 per ounce lower. The Company maintains its full year operating guidance, with stronger production expected in subsequent quarters and lower costs anticipated in the second half. The realized gold price for the quarter was $912 per ounce(1) versus the average spot price of $908 per ounce. The Company reported first quarter net income of $371 million compared to net income of $514 million in the prior year period. Adjusted net income of $298 million compares to $537 million in the prior year period. Lower adjusted net income in Q1 2009 reflects lower realized prices and higher cash costs compared to the prior year period. Operating cash flow of $349 million compares to operating cash flow of $718 million in the prior year period reflecting lower net income levels and movements in working capital.

"We had a good start to the year with our operations on plan to meet our production and cost guidance," said Aaron Regent, Barrick's President and CEO. "I am pleased to announce that our Buzwagi project in Tanzania is essentially complete and ready to pour its first gold. This is the sixth mine Barrick has built in the last six years that has come in on time, and continues our successful track record of execution on new projects. Our outlook for gold remains positive, providing a favorable backdrop for the development of our next generation of lower cost mines."

Q1 was a lower production and higher cost quarter as expected due to planned mine sequencing. Higher production is expected in subsequent quarters and lower cash costs anticipated in the second half of the year as higher grades are accessed at a number of operations and with the benefit of new production from Buzwagi. The Company is on track with its full year production guidance of 7.2-7.6 million ounces of gold at net cash costs of $360-$385 per ounce or total cash costs of $450-$475 per ounce. In order to improve comparability with other gold producers that report gold cash costs net of the contribution from non-gold revenue, we are using a measure referred to as 'net cash costs' which is prepared on this basis. This measure is provided in addition to our total cash cost per ounce measure.

The North America region had a strong quarter, exceeding plan with production of 0.74 million ounces at total cash costs of $498 per ounce. The Goldstrike operation produced 0.40 million ounces at total cash costs of $435 per ounce on higher open pit grades. At Cortez, production of 0.09 million ounces at total cash costs of $671 per ounce reflects lower grades at the Pipeline pit. Production and costs are expected to improve in subsequent quarters with access to higher grade material. The Company's $65 million acquisition of the other 50% interest in the Hemlo mine from Teck Cominco Limited has closed. The operation had a strong quarter, performing better than plan on higher grades and throughput.

The South American business unit produced 0.40 million ounces in Q1 at total cash costs of $291 per ounce. The Lagunas Norte mine delivered another quarter of solid results with production of 0.24 million ounces at total cash costs of $131 per ounce. Production is anticipated to increase in the second half of the year due to higher grades. Production of 0.09 million ounces at Veladero at total cash costs of $623 per ounce reflected expected lower grades and higher stripping during the first half of the year. Production and costs are expected to improve in the second half of the year with access to higher grade ore and higher throughput following completion of a crusher expansion to increase processing capacity from 50,000 to 85,000 tons per day. The expansion is approximately 70% complete and on schedule to be commissioned in Q3.

Production for the Australia Pacific business unit of 0.49 million ounces was on plan. Total cash costs of $610 per ounce are expected to improve in subsequent quarters with improved performance at a number of operations. Porgera continued to be the region's largest contributor with production of 0.15 million ounces at total cash costs of $470 per ounce, coming in ahead of plan. The Kalgoorlie mine also performed better than expected with access to higher grade ore.

Production from the African business unit was 0.13 million ounces in Q1 at total cash costs of $561 per ounce with Bulyanhulu and North Mara showing signs of improved performance.

The Company is on track with full year copper production guidance of 375-400 million pounds at total cash costs of $1.25-$1.35 per pound. Q1 copper production was 95 million pounds at total cash costs of $1.32 per pound. The Company benefited from its copper hedge position, realizing $2.93 per pound, $1.37 per pound higher than the average spot price.

Barrick's three projects in construction continue to progress on schedule and within their respective pre-production capital budgets, and are expected to contribute nearly 2.0 million ounces of lower cost production once at full capacity(2). Production is expected to increase to 7.7-8.1 million ounces in 2010 with new production from Cortez Hills(3).

Buzwagi in Tanzania is expected to pour first gold shortly, on schedule and in line with its $400 million pre-production capital budget. The mine is expected to produce 200,000 ounces of gold at total cash costs of $320-$335 per ounce in 2009.

In Nevada, Cortez Hills remains on schedule for first production in Q1 2010 assuming the satisfactory resolution of the pending litigation regarding the project and is in line with its capital budget of $500 million. The Cortez property is expected to materially benefit 2010 production, becoming another one million ounce producer for Barrick at total cash costs of $350-$400 per ounce in its first full five years once Cortez Hills comes on line.

The Pueblo Viejo project in the Dominican Republic is advancing on schedule and in line with its pre-production capital budget of approximately $2.7 billion (100% basis)(4), with initial production anticipated in Q4 2011. Barrick's 60% share of annual gold production in the first full five years of operation is expected to be 600,000 to 650,000 ounces per year at total cash costs of about $275-$300 per ounce. Pueblo Viejo is a long life asset with an expected mine life of over 25 years.

At Pascua-Lama, significant progress has been made on securing the remaining sectoral permits and approvals as well as on fiscal matters at the federal level including the cross-border taxation arrangements between Chile and Argentina. The Company expects to provide a detailed project update in Q2.

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.