Barrick Gold cuts Argentina mine output forecast

JOHANNESBURG (miningweekly.com) – Toronto-based miner Barrick Gold’s shares fell nearly 4% in after-hours trade on Monday, after the group lowered its production forecast and increased its cost guidance at its Veladero mine, in Argentina.

The mine, where authorities suspended the addition of cyanide to the heap leach process following a March 28 spill, will produce between 100 000 oz and 140 000 oz less than originally thought, the bullion miner stated on Monday in its first-quarter results announcement.

The new 2017 guidance for Veladero, in which China’s Shandong Gold Group is acquiring a 50% stake for $960-million, is gold production of between 630 000 oz and 730 000 oz at all-in sustaining costs (AISC) of $890/oz to $990/oz. This compares with an original forecast of 770 000 oz to 830 000 oz at an AISC of $840/oz to $940/oz.

Barrick’s share of the revised production, assuming 50% ownership from July 1, will be 430 000 oz to 480 000 oz.

The updated guidance assumes that normal leaching activities at Veladero will resume in June, the company said, noting that it had presented a proposed work plan to authorities on Friday and that it had already started initial work on the proposed modifications to the heap leach facility.

The San Juan provincial authority on March 29 restricted the addition of cyanide to the mine’s heap leach process after a coupling on a pipe carrying gold-bearing solution at the plant failed.

As a result of the expected production impact and the sale of 50% of Veladero, Barrick has lowered its group gold forecast to between 5.3-million and 5.6-million ounces, from an original guidance of 5.6-million ounces to 5.9-million ounces.

The group’s gold cost guidance remains unchanged at $720/oz to $770/oz.

The copper production guidance also remains unchanged at 400-million to 450-million pounds at an AISC of $2.10/lb to $2.40/lb.

Barrick produced 1.31-million ounces of gold at an AISC of 772/oz in the first quarter, compared with 1.28-million ounces at $706/oz in the prior-year period. The miner explained that about 90% of the cost increase was owing to higher sustaining capital expenditures. Significant items in the first quarter included planned capitalised stripping at Barrick Nevada, increased expenditures at Veladero relating to phase 4B and 5B of the leach pad, and other equipment purchases. Gold production in the first quarter was impacted by the timing of autoclave maintenance at the Pueblo Viejo mine in the Dominican Republic. Heavy rains, road closures and power outages associated with the El Niño weather pattern also impacted on production at the Lagunas Norte mine, in Peru. However, both operations are expected to achieve their original full-year production guidance.

The company produced 95-million pounds of copper in the first quarter at an AISC of $2.19/lb. This compares with 111-million pounds at an AISC of $1.97/lb in the first quarter of 2016. The copper production decrease was attributed to lower output at the Lumwana mine, in Zambia, as a result of lower tonnes processed combined with lower grades.

Barrick swung to a profit of $679-million ($0.58 a share), from a loss of $83-million ($0.07 a share) in the first three months of 2016, as a result of about $1.125-billion of net impairment reversals in the first quarter of 2017.