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Barrick’s earnings drop in quarter

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Barrick Gold Corp.’s president and chief executive officer, Mark Bristow, highlighted exploration potential for the Nevada Gold Mines joint venture in his presentation on the third quarter that showed that Barrick’s earnings were down from the 2020 quarter.

Toronto-based Barrick posted adjusted net earnings of $419 million in the third quarter, or 24 cents per share, down from $726 million, or 41 cents per share, in the 2020 quarter. Net earnings totaled $347 million, compared with $882 million in the third quarter of last year.

Zacks Consensus Estimate for Barrick earnings was 24 cents per share, on the nose for Barrick’s adjusted net earnings.

Barrick Gold CEO Mark Bristow comments on cost inflation and gold prices during an interview with Bloomberg's Guy Johnson and Alix Steel on "Bloomberg Markets."

In its Nov. 4 report on Barrick finances, the company attributed lower earnings to lower gold prices and lower sales volume because of the mill failure earlier this year at the Goldstrike roaster in Nevada that was repaired in September.

“We’re set for a strong finish this year,” Bristow said of Nevada Gold Mines, with Barrick as operator and 61.5% owner and Newmont Corp. as 38.5% owner.

The average realized gold price in the third quarter was $1,771 per ounce, compared with $1,926 per ounce in the 2020 quarter. The spot gold price on Nov. 4 in early afternoon trading was $1,792.90 per ounce.

Barrick’s share price was up 10 cents to $18.73 in early afternoon trading on Nov. 4, and Barrick announced a quarterly dividend of 9 cents per share.

On NGM exploration, Bristow said “the best intercept to date” at Carlin was at North Leeville, where follow-up drilling is under way. Barrick’s slide on North Leeville shows a drilling result of 139.1 feet at 1.15 ounces of gold per ton (42.4m at 32.62g/t Au).

Also at Carlin, underground drilling at the Ren deposit near infrastructure is showing potential, and Bristow said he is “super excited” about Ren.

Also on the Carlin Trend, South Arturo, now 100% NGM after an asset swap with i-80 Gold, has new ore potential to extend the mine life, he said in the earnings presentation.

At Cortez, there is new potential at the Cortez Hills underground mine, and the U.S. Bureau of Land Management is preparing the draft environmental impact statement for Goldrush. Test ore from the Goldrush underground project has been through the Goldstrike roaster with good results, Bristow said.

He said exploration between Turquoise Ridge and Twin Creeks in Humboldt County has identified two high priority targets, and the third shaft now under construction at the underground Turquoise Ridge “will be a game changer” when completed in 2022.

Meanwhile, NGM is testing four electric haul trucks underground at Turquoise Ridge for Sandvik, and the trucks are “always great, when they work,” Bristow said. Sandvik supplied more conventional trucks so that the test project can continue, he said.

Companywide, gold production totaled 1.09 million ounces in the third quarter, compared with nearly 1.16 million ounces in the 2020 quarter, and copper production was at 100 million pounds, down slightly from 103 million pounds in the third quarter of last year.

In Nevada, gold production of 495,000 ounces was for Barrick’s share of NGM production. Barrick also reported that NGM’s total gold production for both partners was 805,000 ounces in the third quarter.

Barrick’s report shows that on a 100% basis, Carlin operations produced 340,000 ounces and Cortez Mine produced 212,000 ounces in the third quarter. Turquoise Ridge’s 100% production totaled 134,000 ounces, and the Phoenix Mine’s 100% production was 50,000 gold equivalent ounces. Long Canyon between Wells and West Wendover produced 69,000 ounces for both owners.

Bristow said a decision on Long Canyon’s future would be made in early 2022, but the graphics included with his presentation show Long Canyon as going into residual leaching next year.

All-in sustaining costs for all Barrick operations for gold production was $1,034 per ounce, compared with $966 per ounce in the 2020 quarter.

Looking at COVID-19 impacts, Bristow said the “pandemic continues to impact our lives and our business, and most recently that has been with the supply chain crisis,” and Barrick continues to push the COVID-19 vaccines companywide.

The vaccine rate for Barrick workers in Latin America is 67% and for all of Barrick, 35%, but Nevada lags with only 32% of workers partially or fully vaccinated, due to “political and social issues,” Bristow said. “In Nevada, people don’t want to be treated like children.”

Bristow, who visited Elko last month to update the community, said on Nov. 4 that NGM has had mobile vaccine clinics and “we keep banging away” with the vaccine message.

NGM’s gold production, however, continued during the pandemic. Bristow said all the COVID-19 protocols were put in place at Nevada operations early in the pandemic so production “didn’t miss a beat.”

Greg Walker, who heads NGM, said in the Nov. 4 earnings webinar that last week there were 20 positive COVID-19 cases at the Nevada operations, and 60 people were off from work. The impact to operations comes when there is a cluster of cases, such as with a whole drilling crew, he said.

Barrick also reported that NGM has started construction of a 100-megawatt solar power plant in Nevada and has permitting to double that amount. The project, which is part of Barrick’s greenhouse gas reduction strategy, is at the site of the TS Power Plant near Dunphy.

Additionally, Barrick reported that the third tranche — $250 million — of a return of capital distribution totaling $750 million was completed and will be paid to shareholders.

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