Barrick says JV performance solid in its first quarter
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Barrick says JV performance solid in its first quarter

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Barrick Gold Corp.’s third-quarter adjusted net earnings were higher at $264 million, and the company reported Wednesday that Nevada Gold Mines delivered a solid performance for the first quarter since formation of the joint venture between Barrick and Newmont Goldcorp Corp.

Barrick Chief Executive Officer and President Mark Bristow said in a teleconference the joint venture staff has “done an outstanding job of integrating operations.” He said savings this year already are at $311 million. The joint venture’s goal is an annual savings of $450 million to $500 million.

Nevada Gold Mines is the joint venture of Barrick and Newmont formed July 1 for the mines in Nevada they had each owned, with Barrick now 61.5 percent owner and operator. Newmont holds 38.5 percent of Nevada Gold Mines.

The $265 million in adjusted net earnings, or 15 cents per share, compared with adjusted net earnings of $89 million, or 8 cents per share, in the third quarter of last year. The earnings beat analyst predictions of 11 cents per share, according to news reports.

Barrick’s share price was at $16.93, up 39 cents, in late afternoon trading Wednesday.

Barrick’s net earnings for the quarter ending Sept. 30 were $2.28 billion, or $1.30 per share, compared with a loss of $412 million, or 35 cents per share, in the 2018 quarter.

The average gold price in the third quarter was $1,476 per ounce.

The company reported third-quarter gold production of 1.31 million ounces, compared with 1.15 million ounces in the 2018 quarter, and this included 535,000 ounces for Barrick’s share of Nevada Gold Mines production. Combined with Newmont’s share of 344,000 ounces, Nevada Gold Mines produced 879,000 ounces in the quarter.

Total cash costs for Nevada averaged $570 per ounce and all-sustaining costs were $772 per ounce, according to Barrick’s report.

The joint venture includes the Cortez Deep South project that received U.S. Bureau of Land Management approval in September and is expected to contribute to Cortez gold production beginning in 2020 and ramp up to 150,000 to 250,000 ounces of gold production from 2022 to 2031.

According to Barrick, Deep South will use infrastructure already approved under current plans to expand mining in the Lower Zone of the Cortez underground mine.

Barrick reported that on a 100 percent basis, the joint venture had spent $33 million on Deep South as of Sept. 30.

Barrick’s Goldrush complex also is moving ahead toward a mine, with a plan of operations submitted to the BLM in September as step in the permitting process for the project. The company wrote that a small part of its nearby Fourmile gold discovery that is contiguous to Goldrush is included in the plan.

Barrick stated that it anticipates project approval in two years. The company reported the 2019 infill and edge drilling program ended in October.

Toronto-based Barrick also reported that construction of the twin exploration declines at Goldrush has been accelerated, and the declines will provide access to the ore body and for underground exploration drilling to convert resources to reserves. Progress is at 46 percent.

Goldrush is part of the joint venture while Fourmile isn’t at this point but can be added when certain targets are met. Bristow said it would be a couple of years before Barrick is ready to move into the feasibility stage with Fourmile.

Bristow said in the teleconference that Barrick has the right to “force Fourmile into the joint venture at fair market value and cost of the feasibility study” under a formula that allows Newmont to pay to keep its current 38.5 percent ratio or agree to dilute its percentage.

There also was a new discovery borehole north of Fourmile, Barrick stated.

Barrick’s earnings report also provided an update on work at the Turquoise Ridge Mine in Humboldt County. Construction of a third shaft at the underground mine is on schedule and on budget, and work in the third quarter focused around the hoist frame and head frame.

“The shaft will significantly improve the ventilation. That’s a big holdup in increasing production,” Bristow said.

All sinking equipment is on site and ready for commissioning in the current quarter.

Barrick stated that the joint venture has spent $109 million to date on the project out of an expected overall cost of $300 million to $327 million.

Nevada Gold Mines’ Carlin operations also “offer lots more to build on,” including extensions at the Leeville underground mine, and there is a significant orebody between the Carlin operations that were Newmont’s and the Goldstrike Mine that was Barrick’s, Bristow said.

Looking at Barrick’s progress since the merger with Randgold Resources at the first of this year, Bristow said that comparing what “we said we would do with what we’ve done” is at 100 percent, and the company is showing that it is “a very different company.”

He pointed to Barrick’s 25 percent increase in its dividend. The company announced Wednesday the dividend is 5 cents per share, and Graham Shuttleworth, senior executive vice president and chief financial officer, said the increased dividend reflected Barrick’s strong operating performance and growth in cash flows.

Bristow also reported that the Pueblo Viejo Mine in the Dominican Republic, a joint venture with Newmont Goldcorp, “has an enormous resource base that is in a class of its own.” Plant expansion studies are under way.

Barrick’s Veladero Mine in Argentina is one the company’s “biggest challenges,” Bristow said, but the team there has driven down costs and improved relationships with the community and government, and there are opportunities in and around Veladero.

The Porgera Mine in Papua New Guinea also presents challenges as the company works on extending a special mining license for 20 years, according to Bristow.

Bristow also said an agreement with the government of Tanzania is a “ground-breaking development” at a time when governments are nationalizing mines. Barrick resolved a tax dispute with the government with Acacia Mining and bought out Acacia.

Barrick stated that a team is working on evaluating and stabilizing the North Mara and Bulyanhulu mines there. The new operating company is called Twiga Minerals Corp., which manages North Mara, Bulyanhulu and Buzwagi.

Barrick also reported the Loulo-Gounkoto Mine in Mali set production records in the third quarter and is one of the largest businesses in West Africa.

Adjusted net earnings of 15 cents per share beat analyst predictions of 11 cents per share, according to news reports.

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Nevada Gold Mines LLC’s Deep South project at the Cortez Mine south of Crescent Valley has received approval from the U.S. Bureau of Land Mana…

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