Elko Daily Free Press 4-29-10

Barrick posts record net income

ELKO — Barrick Gold Corp. on Wednesday reported record profits for the first quarter and attributed the golden earnings to higher production, lower cash costs and higher gold and copper prices.

The Toronto-based company’s net income totaled $758 million, or 77 cents per share, compared with $371 million, or 42 cents per share, in the first quarter of 2009. Adjusted net income rose 149 percent to $741 million, or 75 cents per share, from $298 million, or 34 cents per share, last year.

Analysts had expected earnings of 62 cents per share. Barrick’s share price closed at $42.17 Wednesday, up $1.50.

The world’s largest gold producer also reported gold production rose 19 percent to 2.08 million ounces, produced at total cash costs of $442 per ounce, down $42 from the 2009 quarter, or net cash costs of $342 per ounce, down $62 from last year.

Barrick President and Chief Executive Officer Aaron Regent said in an earnings teleconference that Barrick is off to a good start this year.

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“We are particularly pleased with the performance of our Cortez property. The Cortez Hills Project was completed on time and budget, and the recent decision of the (U.S.) district court in Nevada will allow it to continue operating,” he said.

Barrick reported the company’s realized gold price for the quarter was $1,114 per ounce, $5 above the average spot price of $1,109 in the first quarter. Jamie Sokalsky, executive vice president and chief financial officer, said the market “could very easily see new highs in the gold price.”

He said the decoupling of the U.S. dollar from the gold price “bodes well going forward.” Traditionally, gold prices move in the opposite direction of the dollar’s value.

Sokalsky also said credit worries in Europe are creating more interest in gold as a safe-haven investment, and central bankers as net buyers of gold, rather than sellers, signal that prices may go up. He said in the teleconference that growth in the jewelry market in China and tightening gold supplies are reasons for higher prices.

The London afternoon fix price Wednesday was $1,161 per ounce, up from $1,149.50 on Tuesday. The June Comex gold futures closed Wednesday at $1,171.80, up $9.60.

The Cortez Mine in Lander County that includes the new Cortez Hills operations helped boost production, with 275,000 ounces produced in the first quarter at a total cash cost of $346 per ounce, Regent said.

Cortez produced 92,000 ounces at a total cash cost of $671 per ounce in the 2009 quarter.

The company reported Cortez Hills was completed in the first quarter and the Cortez property, including the Pipeline operations, are expected to produce between 1.08 million and 1.12 million ounces of gold this year at a total cash cost of $295 to $315 per ounce.

Barrick received U.S. District Court approval earlier this month to continue mining at Cortez Hills while the U.S. Bureau of Land Management completes a supplemental environmental impact statement on three areas of concern cited by the Ninth Circuit Court of Appeals in a December 2009 ruling.

The company has to restrict mine dewatering and shipments of refractory ore while the study is under way as part of the agreement that stems from legal action two Western Shoshone tribes, the Western Shoshone Defense Project and Great Basin Resource Watch filed against the BLM over Cortez Hills approval.

Barrick anticipates the BLM will issue a record of decision on the issues being studied by the end of this year, Regent said in the teleconference.

Nevada gold production in addition to Cortez’s ounces included 279,000 ounces from the Goldstrike Mine north of Carlin at a total cash cost of $581 per ounce, compared with 409,000 ounces at a total cash cost of $435 per ounce in the 2009 quarter.

Barrick’s Turquoise Ridge underground mine in Humboldt County produced 34,000 ounces for Barrick’s 75 percent share, compared with 27,000 ounces last year, and the total cash cost was $505 per ounce, down from $552 last year. Newmont Mining Corp. owns the other 25 percent of Turquoise Ridge.

The Ruby Hill Mine in Eureka County produced 13,000 ounces in the first quarter, compared with 31,000 ounces in the 2009 quarter, and total cash costs were $633 per ounce this year, compared with $366 per ounce in the 2009 quarter. Barrick owns 100 percent of Ruby Hill.

Barrick’s 100 percent-owned Bald Mountain Mine in White Pine County produced 13,000 ounces in the quarter at a total cash cost of $814 per ounce, compared with production of 20,000 ounces at a cost of $644 last year. An expansion project is under way at Bald Mountain.

The Round Mountain Mine in Nye County, which is 50 percent owned by Barrick and operated by Kinross Gold Corp., produced 41,000 ounces at a total cash cost of $667 per ounce for Barrick’s account in the 2010 quarter, compared with 50,000 ounces at $585 per ounce last year.

The Marigold Mine in Humboldt County produced 15,000 ounces for Barrick’s one-third share at a total cash cost of $508 per ounce, compared with 8,000 ounces at a cost of $805 last year. Goldcorp Inc. owns the remaining two-thirds and operates the mine.

Companywide, copper production totaled 100 million pounds, compared with 95 million pounds in the 2009 quarter. The average spot price was $3.29 per ounce in the 2010 quarter, compared with $1.56 per ounce in the 2009 quarter.

Barrick also stated the company remains on track with expectations of producing between 7.6 million and 8 million ounces of gold this year at a total cash cost of between $425 and $455 per ounce or a net cash cost of $345 to $375 per ounce.