Barrick Reports First Quarter 2016 Results
Press Release
- Barrick reported adjusted net earnings of $127 million ($0.11 per share)1, and a net loss of $83 million ($0.07 per share), in the first quarter.
- The company generated $181 million in free cash flow1 in the first quarter, marking four consecutive quarters of positive free cash flow. First quarter EBITDA was $696 million1.
- Gold production in the first quarter was 1.28 million ounces at all-in sustaining costs (AISC) of $706 per ounce1.
- We reduced all-in sustaining costs by 24 percent and cash costs by 14 percent compared to the first quarter of 2015, reflecting the impact of ongoing operating and capital cost savings initiatives as well as lower fuel prices and foreign exchange gains.
- All-in sustaining cost guidance for 2016 has been reduced to $760-$810 per ounce, down from our original guidance of $775-$825 per ounce. We continue to expect gold production of 5.0-5.5 million ounces for the year.
- We have reduced total debt by $842 million year-to-date, and we remain on track to achieve our $2 billion debt reduction target for the year.
- During the quarter, we established a Growth Group, comprised of Rob Krcmarov, Catherine Raw and Kevin Thomson, to develop and advance strategies that will grow free cash flow per share over the long-term.
TORONTO, April 26, 2016 — Barrick Gold Corporation (NYSE:ABX)(TSX:ABX) (Barrick or the company) today reported adjusted net earnings of $127 million ($0.11 per share) for the first quarter, and a net loss of $83 million ($0.07 per share). The net loss for the quarter primarily reflects the impact of one-time foreign currency losses. First quarter free cash flow was $181 million and EBITDA was $696 million.
Production in the first quarter was 1.28 million ounces of gold at all-in sustaining costs of $706 per ounce. Cash costs were $553 per ounce1. We continue to expect full-year production of 5.0-5.5 million ounces of gold at lower all-in sustaining costs of $760-$810 per ounce.
Our operations performed well in the first quarter as we began to deliver on our 2016 priorities, including progress on lowering our free cash flow breakeven gold price to $1,000 per ounce, reducing total debt by $2 billion, implementing Best-in-Class to improve efficiency and productivity across all operations, and maintaining strict capital discipline.
STRATEGIC FRAMEWORK
After a year of renewal that laid the foundation to create long-term value for our owners, every action we take is focused on one overarching objective: growing free cash flow per share. We are doing this through the pursuit of three strategic goals. The first is a profound commitment to building partnerships of real depth and trust with host governments, local communities, NGOs, indigenous people, and others. The second goal is to produce the leading margins in the industry by operating in a way that is gold-price agnostic. Whatever the gold price, we are constantly pushing ourselves to reduce our costs by being first in productivity and efficiency. That means a continuous, relentless cycle of improvement and innovation, such that we should weather gold price volatility better than any other miner, while growing free cash flow per share over the long-term. The third goal is superior portfolio management. We measure our production in quality, not quantity. While we produce fewer ounces than we have in recent years, we are generating significantly more free cash flow per share. We will manage our portfolio to grow our cash margin over growing ounces, and we will assess existing and new opportunities, both internal and external, with that goal in mind.
RESTORING A STRONG BALANCE SHEET
Strengthening our balance sheet remains one of our top priorities. In 2016, we intend to reduce our total debt by at least $2 billion by drawing on our existing cash balance, delivering free cash flow from operations, selling additional non-core assets, and creating new joint ventures and partnerships.
So far this year, we have reduced our total debt by $842 million, representing 42 percent of our debt reduction target for the year. Since the start of 2015, we have reduced our total debt by $3.95 billion, or roughly 30 percent. This is expected to reduce our interest payments by approximately $180 million on an annualized basis.
The company’s liquidity position is strong and continues to improve, underpinned by stronger free cash flow generation across the business, and modest near-term debt repayment obligations. At the end of the first quarter, Barrick had a consolidated cash balance of approximately $2.3 billion2. The company has less than $200 million in debt due before 2018, and about $5 billion of our outstanding debt of $9.1 billion does not mature until after 20323.
In the medium term, we aim to reduce our debt to below $5 billion. Philosophically, our goal is to have no debt at all. We will continue to pursue debt reduction with discipline, taking only those actions that make sense for the business, on terms we consider favorable to our shareholders.
IBF2
