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North American gold miners post mixed results in Q2'19

Among the larger North American listed gold miners, Barrick Gold Corp., Kinross Gold Corp. and Agnico Eagle Mines Ltd. saw profits rise in the second quarter as Newmont Goldcorp Corp. swung to a loss.

Barrick posted a US$194 million profit, swinging year over year from a loss of US$94 million, and said it expects to hit the upper end of its 2019 gold production guidance of between 5.1 million and 5.6 million ounces.

Looking to the second half, the company pointed to savings it expects to start making from a joint venture it closed July 1 with Newmont covering most of their major assets in Nevada, a key center of production for both companies. Barrick said it expects short-term synergies of about US$240 million on an annualized basis.

The joint venture saw Barrick and Newmont agree in March to combine their major gold mining assets in Nevada, putting Barrick in the driver's seat with a 61.5% stake. On an Aug. 12 earnings call, Barrick President and CEO Mark Bristow, who took Barrick's helm after a merger with Randgold that closed in early 2019, said, "The rationale behind our recent merger initiatives is to control the majority of the industry's tier 1 assets."

Newmont swung the other way year over year, booking a US$25 million loss in the second quarter after posting a US$292 million profit for the second quarter of 2018. The gold miner cited transaction costs and mine suspensions at Penasquito and Musselwhite, among other factors, for the loss.

Newmont's revenues jumped 35.8% to US$2.26 billion, from US$1.66 billion in the prior-year period, rising on the back of added production from its merger with Goldcorp earlier this year. Its attributable production climbed 37% year over year to 1.59 million ounces of gold.

Kinross' earnings jumped to US$71.5 million, from US$2.4 million in the second quarter of 2018. Attributable gold equivalent production rose to 648,251 ounces from 602,049 ounces over the same period.

As it reported earnings, Kinross management outlined details on its agreement to buy the Chulbatkan gold project in Russia for US$283 million. On an Aug. 1 earnings call, Geoffrey Gold, a Kinross executive vice president, said the company expects the project to get approval under a strategic resource law if required.

Agnico Eagle's net profit in the second quarter climbed to US$27.8 million from US$5.0 million the year before as gold output rose to 412,315 ounces from 404,961 ounces. All-in sustaining costs climbed to US$953/oz, from US$921/oz in the prior-year period.

CEO Sean Boyd said on a July 25 earnings call that he expects the company's performance to strengthen in the second half.

Addressing potential asset sales by gold majors on a second-quarter earnings call, Franco-Nevada Corp. President and COO Paul Brink said he expects divestments to begin this year, aided by a recent surge in the price of gold. Franco-Nevada has said it plans to help fund buyers of those assets.