Barrick Gold maintains 2019 guidance

The Buzwagi gold mine in Tanzania. Source: Acacia Mining Plc.

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Barrick Gold Corp. [ABX-TSX; GOLD-NYSE] on Thursday October 17 posted weaker-than expected third quarter 2019 production and costs but insisted that its full year production will be at the upper end of its 2019 forecasts.

The company has said it expects to produce 5.1 to 5.6 million ounces of gold this year at a cost that is likely to be at the lower end of its all-in-sustaining cost forecast of US$870 to US$920 an ounce.

The pledge comes after Barrick produced 1.31 million ounces of gold and 111 million pounds of copper in the third quarter. Those numbers include the impact of Barrick’s Nevada Gold Mining joint venture with Newmont Goldcorp Corp. [NGT-TSX, NEM-NYSE] which was established on July 1, 2019.

The average market price for gold in the third quarter was US$1,472 per ounce in the third quarter. In the same period, the price of copper averaged US$2.63 a pound.

“Preliminary gold sales and production were slightly below second quarter levels as North Mara in Tanzania was affected by operational restrictions that were in place for most of the third quarter but were lifted by quarter end,” the company said.

Barrick shares advanced on the news, rising 0.85% or 19 cents to $22.57 on volume of 1.8 million. The 52-week range is $15.37 and $26.69.

In September, 2018, Barrick moved to consolidate its position as one of the world’s leading gold producers by agreeing to merge with Randgold Resources Ltd. [GOLD-NASDAQ, LSE].

Barrick said the rationale for the transaction is to create an “industry-leading” gold company holding half of the world’s top 10 Tier One gold assets (defined as having a mine life of over 10 years, at least 500,000 ounces of annual production and in the bottom half of global total cash costs).

Its top 10 Tier One gold assets included Cortez and Goldstrike in Nevada, Kibali in the Democratic Republic of Congo, Loulo-Gounkoto in Mali, and Pueblo Viejo in the Dominican Republic. The company currently has operations and mining projects in 15 countries.

In the third quarter of 2019, weaker-than expected results at the Twin Creeks Complex, Phoenix, Kalgoorlie, and Veladero operations were partly offset by better performance at the Tanzanian assets (previously held by Acacia Mining), Porgera and Loulo-Gounkoto. Acacia was acquired by Barrick in September, 2019.

Third quarter gold cost of sales per ounce is expected to be approximately 11% to 13% higher than the second quarter, primarily due to higher depreciation, resulting from purchase price adjustments at the Nevada Gold Mines joint venture.

A quarter-over-quarter increase in total cash costs per ounce and gold all-in sustaining costs per ounce of approximately 8-10% and 12-14% respectively, is expected, in line with guidance for the year, Barrick said in a press release, Thursday.

Preliminary third quarter copper production was higher than in the second quarter of the year, primarily as a result of higher production at the Lumwana mine in Zambia. However, downtime at a smelter that processes Lumwana’s copper concentrate has significantly reduced copper sales in the quarter (and could impact the fourth quarter), a development expected to impact financial results.

Barrick said it plans to release its third quarter 2019 financial results before the markets open on November 6, 2019.

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