Bar the exception, Canadian gold majors' Q4 headline earnings tread water on lower output

VANCOUVER (miningweekly.com) – Canada's gold majors reported fourth-quarter and full-year 2017 financial results on Wednesday following market close, with headline earnings coming in flat or lower year-on-year, as companies work with smaller, more streamlined production portfolios. The exception was Goldcorp, which put in a stellar performance.

Toronto-based Barrick Gold, the largest gold producer in the world by output, has reported adjusted earnings, which exclude special items for the three months ended December, of $253-million, or $0.22 a share, which beat analyst forecasts by a penny.

The miner reported a net loss of $314-million, or $0.27 a share, compared with earnings of $425-million, or $0.36 a share, a year earlier, as Barrick booked impairment charges in the period including $429-million on the stalled Pascua-Lama project, straddling the Chile/Argentina border.

Revenues for the period fell 4% year-on-year to $2.23-billion, which was mainly a function of 10% fewer ounces sold at 1.37-million ounces of gold. The miner produced 1.34-million ounces of gold in the quarter, down from 1.52-million ounces recorded in the comparable period of 2016.

Barrick reported cost of sales of $801/oz in the quarter, which was 2.2% higher year-on-year, while the World Gold Council's all-in sustaining cost (AISC) metric rose 3.3% when compared with the same period last year to $756/oz.

Barrick expects to produce between 4.5-million and 5-million ounces of gold this year – down from full-year 2017 output of 5.32-million ounces of yellow metal – at an AISC ranging between $765/oz and $815/oz.

The company expects to produce an average of between 4.2-million and 4.6-million ounces of gold a year between 2019 and 2022, at an AISC of $750/oz to $875/oz.

Meanwhile, Vancouver-based Goldcorp reported a strong performance in the fourth quarter of 2017, reporting adjusted operating cash flows of $401-million – a 31% improvement over the year-earlier period.

Net earnings more than doubled year-on-year to $242-million, or $0.28 a share, beating both the average analyst prediction of $0.11 a share, and the highest analyst estimate of $0.18 a share, according to Thompson Reuters data.

Revenue for the period came in at $853-million, which was 5% lower year-on-year, as gold sales fell 18% year-on-year to 633 000 oz of gold, and slightly below analyst estimates calling on average for revenues of $858.1-million. Gold output came in 15% lower during the fourth quarter of 2017, at 646 000 oz.

Cash costs, on a by-product basis, fell 4% year-on-year to $462/oz, while AISC rose 16.5% to $870/oz.

Goldcorp announced that its programme to implement $250-million of sustainable annual efficiencies by the middle of this year is on track, with nearly $200-million achieved in 2017.

Goldcorp expects to lift output to about three-million ounces by 2021, while AISC are expected to fall by 20% to about $700/oz in the same timeframe. It is also aiming at growing its reserve base by 20% over the same period to 60-million ounces of gold.

KINROSS, AGNICO EAGLE
Further, Toronto-based Kinross Gold reported headline earnings that fell below the bar, as it too dealt with a 13% drop in gold output. Adjusted earnings for the three months ended December 31 fell to $16.3-million, or $0.01 a share, falling short of average Wall Street analysts forecasts calling for earnings of $0.03 a share, on revenues of $870.3-million.

Revenues for the quarter came in at $810.3-million – a 10% year-on-year drop, as a result of selling 15% less gold at 634 762 oz of gold. The average realised gold price in the quarter increased to $1 276/oz, compared with $1 217/oz a year earlier.

Output came in at 652 710 oz for the three-month period, with the Bald Mountain mine, in Nevada, doubling output.

Kinross reported costs of $653/oz for the quarter, down more than 8% year-on-year, with the Tasiast mine, in Mauritania putting in a strong performance reducing cost of sales per ounce by about 30%. AISC per gold ounce sold on a by-product basis increased to $1 013 in the period, compared with $1 010 in the same period of 2016.

Kinross has guided for 2018 output of 2.5-million ounces of gold equivalent, down from the 2.67-million ounces produced in 2017. Production cost of sales per gold equivalent ounce is expected to be $730/oz, with AISC forecast to be $975/oz sold on both a gold equivalent and by-product basis.

Fellow Toronto-based miner Agnico-Eagle also put out its financial results, reporting a 25% year-on-year drop in comparative earnings to $45.4-million, or $0.21 a share, for the fourth quarter, but still beat analyst forecasts, that on average called for earnings of $0.19 a share, on revenue of $557.08-million.

Net income just about halved to $35.1-million, or $0.15 a share.

Payable production in the fourth quarter of 2017 was 413 212 oz of gold, compared with 426 433 oz in the fourth quarter of 2016.

Total cash costs for the quarter were $592/oz, compared with $552/oz in the fourth quarter of 2016. Agnico said the increase was as a result of higher mine site costs and lower production in the quarter. AISC for the quarter were $905/oz, compared with $832/oz in the fourth quarter of 2016, owing to higher total cash costs and increased sustaining capital spending.

The company's payable output for the full 2017 was 1.71-million ounces of gold, beating its most recent guidance of 1.68-million ounces.

Gold production for this year is now forecast to be 1.53-million ounces, up from 1.5-million ounces forecast previously, while the expected start-up of several new operations, prompted the company to provide a midpoint guidance for 2019 output of 1.7-million ounces, compared with previous guidance of 1.6-million ounces and 2-million ounces of gold by 2020.

Barrick's NYSE-listed equity gained a further 1.17% in after-market trading, building on a 3.25% gain earlier in the day to $13.81 a share. Goldcorp's equity shone on Wednesday, gaining 4.1% during market hours, and gaining another 4.17% in after-market trading, to change hands at $13.75 a share.

Kinross Gold's NYSE-listed stock gained 8.65% by the closing bell on Wednesday, only to fall 5.85% in after-hours trading, to a level of $4.02 a share. Agnico Eagle's NYSE-listed equity closed the day up 3.57% at $45.49 a share.