GOLD giant Barrick Gold has reported a net loss of US$2.83 billion for the December quarter along with impairments on numerous operations, including Porgera in Papua New Guinea.
As well as the fourth quarter loss, Barrick announced a full-year loss of US$10.37 billion for 2013 after recording US$11.54 billion in impairment charges.
Despite the disappointing result, Barrick maintained an optimistic outlook, while acknowledging the tough year it had experienced.
“2013 was a tough year for Barrick by any measure, but with a renewed focus on capital discipline and operational excellence across the board, we have reset our focus and revitalised the company’s prospects,” Barrick chief executive and President Jamie Sokalsky said.
“We will not veer from this course, which has delivered solid results, reduced costs and improved financial flexibility.”
During the December quarter, Barrick’s US$2.82 billion impairment charges were related to the Pascua-Lam operation, Porgera, Veladero and the Australia Pacific gold business.
At Porgera, which has been subjected to heightened illegal mining activity recently, the company recorded an impairment charge of US$595 million based on changes to the mine plan to focus primarily on higher grade underground ore.
“As a result, Porgera’s estimated mine life has decreased from 13 years to nine years,” Barrick said.
The company’s Australia Pacific portfolio produced 360,000 ounces at a cash cost of US$966 per ounce in the fourth quarter. Of this, Porgera contributed 130,000 at US$1,350 per ounce.
Looking to 2014, Barrick expects production from its Australia Pacific operation to fall between 1 million and 1.08 million ounces, while costs will increase to between $1,050 and $1,100 per ounce, primarily due to expensing of waste removal costs at Porgera.
Barrick highlighted its strengthened balance sheet and financial flexibility in its results released in February, saying it had reduced 2013 capital and operating costs by about $2 billion and had improved near-term cash flow.
Mr Sokalsky said the disciplined capital allocation framework it adopted in mid-2012 had put it in a much stronger position to deal with the challenging gold price environment.
“Under a comprehensive plan to strengthen the company, we have become a leaner, more agile organisation, better protected against further downside price risk and well positioned to take advantage of attractive investment opportunities going forward,” said Jamie Sokalsky, Barrick’s President and chief executive.
“We have increased our focus on free cash flow and risk-adjusted returns, and successfully executed on our key priorities, which include operational excellence, a stronger balance sheet and the ongoing optimisation of our asset portfolio.”
Barrick expects 2014 production to be between 6 million and 6.5 million ounces at adjusted operating costs of between US$590 and US$640 per ounce, down from the 2013 production level of 7.16 million ounces.
Barrick said the lower production in 2014 reflected the company’s strategy to maximise free cash f low and returns over ounces, the divestment of high-cost, short-life mines and lower production from its Cortez mine in Nevada, in the United States.