Barrick Produced 1.31 Million Ounces Of Gold
TORONTO - Barrick produced 1.31 million ounces of gold in the first quarter at a cost of sales of $833 per ounce, in line with plan. This compares to 1.28 million ounces at a cost of sales of $810 per ounce in the prior-year period.
All-in sustaining costs in the first quarter were $772 per ounce, compared to $706 per ounce in the first quarter of 2016. Approximately 90 percent of this increase, or roughly $58 per ounce, is a result of higher sustaining capital expenditures compared to the prior-year period. Significant items in the first quarter included planned capitalized stripping at Barrick Nevada, increased expenditures at the Veladero Mine in Argentina, relating to phase 4B and 5B of the leach pad, and other equipment purchases. Over the same period, cash costs decreased, from $553 per ounce in the first quarter of 2016 to $545 per ounce in the first quarter of 2017.
Gold production in the first quarter was impacted by the timing of autoclave maintenance at the Pueblo Viejo mine in the Dominican Republic. Heavy rains, road closures. and power outages associated with the El Niño weather pattern also impacted production at the Lagunas Norte mine in Peru. Both operations remain on track to achieve their original full-year production guidance.
The Company produced 95 million pounds of copper in the first quarter, at a cost of sales of $1.73 per pound, and all-in sustaining costs6 of $2.19 per pound. This compares to 111 million pounds, at a cost of sales of $1.34 per pound, and all-in sustaining costs6 of $1.97 per pound in the first quarter of 2016. Lower copper production in the first quarter was primarily the result of lower production at the Lumwana mine in Zambia, as a result of lower tonnes processed, combined with lower grades.
Barrick now expects full-year gold production of 5.3-5.6 million ounces, down from the previous range of 5.6-5.9 million ounces. A significant portion of this reduction is attributable to the anticipated sale of 50 percent of Veladero, which is expected to close at the end of the second quarter. The updated guidance assumes no change to Acacia's full-year guidance as a result of the export ban on concentrates currently affecting Acacia's operations in Tanzania. It also assumes the resumption of normal processing activities at Veladero in June, subject to government approval of proposed modifications to the mine's operating systems.
Barrick continues to expect full-year cost of sales attributable to gold to be $780-$820 per ounce, and all-in sustaining costs3 of $720-$770 per ounce. The copper production guidance for 2017 is unchanged at 400-450 million pounds, at a cost of sales applicable to copper between $1.50-1.70 per pound, and all-in sustaining costs6 of $2.10-$2.40 per pound.
The creation of new partnerships and joint ventures is a core element of our strategy to grow free cash flow per share over the long term. So far this year, we have entered into four new partnerships in support of this long-term strategy.
On April 6, Barrick announced that it had entered into a strategic cooperation agreement with Shandong Gold Group Co., Ltd., the leading underground mining company in China, based in Jinan, Shandong province. As a first step in the new partnership, Shandong Gold Mining Co., Ltd, the listed company of Shandong Gold Group, will acquire 50 percent of Barrick's Veladero mine in San Juan province, Argentina, for $960 million. As a second step, Barrick and Shandong will form a working group to explore the joint development of the Pascua-Lama deposit. As a third step, both companies will evaluate additional investment opportunities on the highly prospective El Indio Gold Belt on the border of Argentina and Chile, which hosts a cluster of world-class gold mines and projects including Veladero, Pascua-Lama, and Alturas.
On March 28, Barrick announced that it has reached an agreement with Goldcorp Inc. to form a new partnership at the Cerro Casale Project in Chile. Under the terms of the agreement, Goldcorp has agreed to purchase a 25 percent interest in Cerro Casale from Barrick, as well as Kinross Gold Corporation's 25 percent interest, resulting in a 50/50 joint venture between Barrick and Goldcorp. The agreement brings a fresh perspective to the project, along with the potential for synergies in the district.