Gold and Copper Output Decline
Barrick Gold (NYSE GOLD / WKN 870450), the world’s second-largest gold producer, reported around 0.95 million ounces of yellow metal and 88 million pounds of copper in the first three months of 2023. This was lower than the same period last year when it produced 0.99 million ounces of gold and 101 million pounds of copper, and also lower than the fourth quarter of 2022 when it produced 1.12 million ounces of gold and 96 million pounds of copper.
However, the drop was not unexpected, as the company had anticipated this due to planned maintenance work at Nevada Gold Mines and the start of commissioning at the Pueblo Viejo mine. Factors that limited production in Nevada included annual roaster maintenance, which resulted in reduced throughput at the Goldstrike mine, the conversion of the Goldstrike autoclave to a conventional coal leaching process, and the severe northern Nevada winter, which affected operations. In addition, there were lower grades at the Kibali mine due to the mining sequence.
Costs Increase for Gold Production
Barrick’s first quarter costs were $986 per ounce (total cash costs), up from $868 per ounce in the fourth quarter of 2022 and $832 per ounce in the first three months of last year. The so-called “all-in-sustaining costs” (AISC) were reported to be USD 1,370 per ounce of gold. They were $1,242 per ounce in the fourth quarter of 2022 and $1,164 per ounce in the first quarter of 2022.
According to the company, the higher cash costs resulted from lower production and sales compared to the previous quarter, among other things. At the same time, the increase in AISC was also due to lower sales, although lower ongoing capital costs mitigated this.
As expected, Barrick also reported that copper production was below the fourth quarter of 2022 due to lower output from the Lumwana and Zaldívar mines.
Financial Performance and Outlook
According to Barrick, free cash flow for the first quarter of 2023 increased to $88 million despite the decline in production. Barrick reported net income at $120 million, or 7 cents a share, while adjusted earnings for the first three months of this year were $247 million, or 14 cents a share. Analysts polled by Zacks Investment Research were expecting an average of 11 cents a share. The company also announced a 10 cents per share dividend for the first quarter. Barrick had previously stated that the first quarter would represent the lowest point in gold production for the year and that output should increase as the year progresses. It is assumed that copper production will increase in the second half of the year. Barrick expects to meet its forecasts for the full year.
