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Nevada Gold Mines

As Barrick Gold Corp. and Newmont Goldcorp near finalization of their joint venture for Nevada gold mines, Barrick Chief Executive Officer Mark Bristow revealed the name of the JV during Barrick’s earnings report on May 8.

The JV’s formal company name will be Nevada Gold Mines, and selection of the new logo was approved by both companies, he said in an earnings teleconference.

Bristow said in the report that “the organizational structures are being finalized, and we’re working together with Newmont to realize the synergies and cost reduction opportunities offered by the joint venture, which is scheduled for completion by the end of the second quarter.”

Barrick will operate the joint venture and own 61.5 percent. Newmont will own 38.5 percent and be equally represented on JV advisory committees. The JV covers the operating mines owned by both companies in Nevada.

Even as the Barrick-Newmont joint venture nears closure, Bristow said a new opportunity has surfaced with a “very significant intersection” at a bore hole at its McCoy Cove exploration joint venture with Premier Gold Mines Ltd. south of Battle Mountain. Premier announced the high-grade gold discovery on April 29.

“Our geologists are definitely excited,” he said in the earnings teleconference. “This reinforces the potential of Nevada.”

According to a map of what Nevada Gold Mines will cover, McCoy Cove is included.

Barrick earnings

The new name for the JV was tucked into Barrick’s earnings report on the first quarter of this year, the first period after the company’s Jan. 1 merger with Randgold Resources. The company reported net earnings slipped, but adjusted net earnings were higher than the 2018 quarter and beat analyst projections.

The Toronto-based company posted net earnings of $111 million, or 6 cents per share, compared with $158 million, or 14 cents per share, in the 2018 quarter, and adjusted net earnings of $184 million, or 11 cents per share, up from $170 million last year, 15 cents per share.

Analysts had expected 9 cents per share, rather than the 11 cents for adjusted net earnings.

Bristow said in the teleconference that earnings for the first quarter were skewed because of the Randgold merger, but “we certainly got off to a good start.” He said, however, that speed in merger adjustments is “not necessarily of the essence when playing the long game. Don’t look for instant gratification or easy pickings.”

Barrick shares closed on the New York Stock Exchange today at $12.57, down 15 cents.

Barrick also declared a dividend of 4 cents payable on June 17 to shareholders of record on May 31. Graham Shuttleworth, Barrick’s senior executive vice president and chief financial officer, said the dividend reflected Barrick’s profitability and financial strength and was in line with a commitment to shareholders for the $6.1 billion acquisition of Randgold.

Gold production

Gold production totaled nearly 1.37 million ounces in the quarter, up from nearly 1.05 million ounces in the 2018 quarter, including 575,000 ounces of gold in Nevada, up from 517,000 ounces.

The Cortez Mine in Crescent Valley produced 262,000 ounces, compared with 285,000 ounces in the 2018 quarter, while Goldstrike north of Carlin produced 233,000 ounces, up from 186,000 last year in the first quarter, and Turquoise Ridge in Humboldt County produced 77,000 ounces for Barrick’s 75 percent share, 67 percent higher than the 46,000 ounces in the 2018 quarter.

Newmont holds 25 percent interest in Turquoise Ridge.

Bristow said in the teleconference that Barrick has dropped the Barrick Nevada practice of lumping Cortez and Goldstrike production together.

Barrick reported construction of a third shaft is on schedule at Turquoise Ridge.

Barrick also stated the Fourmile gold discovery that is expected to eventually be consolidated with the Goldrush project near the Cortez operations is shaping up as the next mega-mine in the Nevada portfolio of mines. Exploration drilling resumed in January.

“Fourmile and Goldrush are classic Carlin-style orebodies of the kind that has made this region one of the world’s most prospective,” Rob Krcmarov, executive vice president of exploration and growth for Barrick, said in the earnings report.

“Another is Turquoise Ridge, adjacent to the Twin Creeks Mine and included in the joint venture, which we anticipate is also on the way to becoming a tier one asset. We feel strongly that Nevada still holds enormous potential for major discoveries,” he said.

The Barrick-Newmont JV doesn’t include Fourmile while Barrick continues exploration to determine whether to mine the deposit, but Bristow said there will be opportunity later to fold it into the JV.

One of the synergies being pursued for the JV is possible changes in underground operations to save costs. Bristow said both Barrick and Newmont have agreed more geotechnical work is needed, but there is the potential for more long-hole open stopes.

Production costs

Cost of sales company-wide was $947 per ounce of gold, up from $878 per ounce last year, and total cash costs were $631 per ounce, up from $573 in the 2018 quarter. Nevada’s cost of sales was $780, down from $829 last year and cash costs were $542, up from $533 in the 2018 quarter.

Barrick reported its realized gold price was $1,307 in the 2019 quarter, compared with $1,223 per ounce last year.

Copper production totaled 106 million pounds for the quarter, up from 85 million pounds in the 2018 quarter.

Barrick is in an action phase that started with the Randgold deal and continues with the joint venture agreement between Barrick and Newmont.

“We have gone a long way towards integrating the organizations, streamlining the processes and ensuring that all sites have the geological, operational and technical capability to meet their business objectives,” Bristow said of the merger with Randgold.

One aspect of the integration has been deciding what assets Barrick will sell because they don’t meet the company’s criteria as gold producers, according to the report, but the company isn’t ready to name which mines in which countries.

He said the market would be notified when the time is right, but Barrick plans to work with stakeholders and with the countries where mines might be sold. The hope is to raise $1.5 billion with the asset sales, Bristow said in the earnings call.

“Given our solid operational performance for the first quarter, Barrick is on track to deliver against its plans for the year,” Bristow said. “Considering the shortage of good assets and the industry’s underinvestment in its own future, we believe we are well positioned as the industry’s value leader.”

He said the process of merging Barrick and Randgold included new executive leadership; a slimmed down technical, financial, commercial, communication and administration team; and streamlining the corporate structure. The Toronto office is now on one floor with roughly 70 people.

“It’s important to note that this is not a cost-cutting exercise. It’s been designed to ensure that the best people are in the right places,” Bristow said in the earnings report.

Looking ahead, Barrick stated that the company still expects gold production of 5.1 million to 5.6 million ounces for this year.

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