By TENDAI KADYAMOTO –
BARRICK Gold Corporation recorded a net loss of US$9 million in the second quarter due to a drop in gold prices with adjusted net earnings of $60 million.
The company’s full-year all-in sustaining cost guidance dropped from $860-$895 to $840-$880 per ounce resulting in an expected cost estimated to be10 per cent lower in the second half of 2015.
Gold production guidance for 2015 has been adjusted to 6.1 – 6.4 million ounces to reflect the impact of divestments and as a result the production free cash flow was $26 million compared to the negative cash flow of $128 in the prior year.
The operating cash flow was $525 million.
This is according to Barrick Report for 2015 Second Quarter Results.
The implementation of a lean, decentralized operating model set to maximize free cash flow and take costs out of the business has helped to mitigate the impact of recent gold price declines.
Meanwhile, the company cut $300 million in capital spending so far this year and is on track to achieve $90 million in reduced general and administrative expenditures by 2016.
Barrick has also made significant progress on the reduction of its debt target by 90 per cent.
Earlier this year, the company set a debt reduction target of $3 billion for 2015 and thus far, it has announced agreements representing $2.45 billion from asset sales, joint ventures as well as streaming.
In addition, it has also retired approximately $250 million in debt using cash on hand in the first half of this year.
Collectively, these actions represent $2.7 billion of its target.
With a $4 billion undrawn credit facility and $2.1 billion in cash on hand at the end of the second quarter the company will continue to pursue its debt reduction target in a disciplined manner.
BCG’s current focus is on improving productivity and reducing operating costs to ensure our business is strong enough to generate a 10-15 per cent return on invested capital through the metal price cycle.
The company is focusing on maximizing free cash flow per share from a portfolio of high-quality gold assets in its core regions, underpinned by disciplined capital allocation and operational excellence.
In the past six months, Barrick have taken significant actions to improve our business plans, resulting in positive free cash flow in the second quarter.
As the company continues to review all expenditures for 2015 and 2016, it will cancel or defer spending that does not meet its capital allocation objectives, which includes the ability to meet a hurdle rate of 15 percent.
In the second quarter, Barrick identified $240 million in reductions that have now been removed from its plans.
The total capital expenditures for 2015 are now expected to be $1.6-$1.9 billion which is 20 per cent lower than in 2014.