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Barrick's Q2 gold production down 15% on year

London — Canadian miner Barrick Gold's second-quarter gold production fell 15% year on year to 1.149 million oz, with total cash costs up 10% at $716/oz and all-in sustaining cost up 19% at $1,031/oz, the company said Aug. 10.

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Barrick -- the world's second-largest gold miner gold – said output the half of 2020 was 2.4 million oz, at the midpoint of the company's 4.6 million-5.0 million oz guidance range for the year.

Full-year 2020 guidance for total cash costs is forecast at $650-$700/oz sold and all-in sustaining cost forecast $920-$970/oz sold, it said.

The company said the output was a result of strong operating performances, "particularly from Nevada Gold Mines (NGM) in the United States, Loulo-Gounkoto in Mali and Kibali in the Democratic Republic of Congo."

At its Africa and Middle East operations, Loulo-Gounkoto and Kibali were at the upper end of their guidance, Barrick CEO Mark Bristow said.

"The Tanzanian assets are still being resuscitated, but exports of the stockpiled concentrate have resumed and the Bulyanhulu underground operation is being recommissioned," Bristow said, adding that between them, North Mara and Bulyanhulu are capable of producing more than 500,000 oz/year for at least 10 years.

In term of North American operations, the company said NGM led by Cortez "trended towards the upper end of its guidance as the integrated structure allowed the management team to adjust ore routing through Carlin's processing facilities in real time, while at the restructured Hemlo in Canada, exploration was indicating support for extending the Life of Mine beyond 10 years at a production profile of around 220,000 oz/year."

In Latin America, the company said production at Pueblo Viejo in the Dominican Republic decreases as projected due to a planned plant shutdown for maintenance, while output and costs at Veladero in Argentina were affected by a nationwide quarantine and severe winter weather.

The Porgera in Papua New Guinea remains on care and maintenance while the issue of its Special Mining Lease is before the court, the company said.

Operations largely unaffected by coronavirus

Canaccord Genuity mining analysts said in a note Aug. 10: "In mid-July, Barrick pre-released Q2/20 production of 1.15 million oz, slightly below Q1/20 production of 1.25 million oz."

"We note that the company's operations were largely unaffected by COVID-19 related suspensions, with the exception of Veladero in Argentina," Canaccord said.

Stifel Financial analyst Ingrid Rico said in a research note Aug. 10 that the company is managing the COVID-related challenges at its operations worldwide and "continues to operate safely at all its mine sites."

"We expect the dividend hike and reassurance that operations remain on-track to meet FY targets (supported by good H1 results) will be viewed positively," Rico said.

Bristow said during the quarter there had been significant exploration results from Mali and Tanzania, Nevada and the Dominican Republic, and the expectation was to add "significant mineral resources" at most operations in 2020.

Gold sold in the second quarter fell 11 % year on year 1.224 million, at an average realized gold price of $1,725/oz, up 31% year on year from $1,317/oz.

Copper output up

The company's second quarter copper production increased 24% year on year to 120 million pounds, with C1 cash costs down 2.5% year on year to $1.55/lb and all-in sustaining cost falling 6% year on year to $2.15/lb.

"Barrick's copper portfolio continued to outperform with Lumwana in Zambia posting its best quarterly production in years," the company said.

The company said it expects its full-year 2020 copper production guidance to be between 440-500 million lb with C1 cash costs forecast between $1.50-$1.80/lb and all-in sustaining cost forecast between $2.20-$2.50/lb.

Copper sold in the second quarter rose 28% year on year to 123 million lb, while the average market price for copper of $2.79/lb, up 6% year on year from $2.62/lb.

Capital expenditure is guided at $1.6-$1.9 billion, which includes $300-$400 million for projects, the company said.

"The company posted adjusted EBITDA of $1.580 billion, as compared to our $1.564 billion estimate. We attribute the difference in EBITDA to higher realized prices of $1,725/oz for gold (CG est $1,711/oz) and $2.79/lb for copper (CG est of $2.43/lb)," Canaccord said.

The gold spot price, at 1500 GMT August 10, was around $2,036/oz.

"Barrick generated $522 million in FCF [free cash flow] in the quarter; net debt has declined to $1.43 billion, down from $1.85 billion at the end of Q1. We forecast Barrick achieving a net cash position in 2021," Canaccord said.