Lower production costs boost Barrick earnings

Net income up 180% from 4Q in 2015

TORONTO • Barrick Gold Corp. raised its dividend Wednesday after fourthquarter earnings beat analysts’ expectations as it lowered its cost of producing gold closer to its US$700 target.

The Toronto-based mining giant, which reports in U.S. dollars, reported net income of US$425 million, or 36 cents per share.

After adjustments, net income for the quarter was US$255 million, or 22 cents a share — a 180 per cent jump from the US$91 million, or eight cents per share it earned in the fourth quarter of 2015. Analysts were expecting earnings of US$227 million, or 20 cents per share.

The company credited increases in realized gold and copper prices and lower costs of sale for the improvements.

“Barrick’s operations delivered progressively-stronger performance over the course of 2016, with three consecutive quarters of improved allin sustaining cost guidance and gold production at the high end of our annual production forecast,” the company said in a statement.

“These results reflect our ongoing focus on capital discipline, and Best-in-Class improvements that are driving greater productivity and efficiency.”

The company also boosted its 2017 gold production estimate to between 5.6 million and 5.9 million ounces with all in sustaining costs coming in between US$750 and US$790 per ounce, representing an improvement from its earlier guidance.

“Our overarching objective is to grow our free cash flow per share,” it said in the statement. Barrick’s outstanding debt as of December was US$7.9 billion. It plans to cut its total debt by US$2.9 billion to US$5 billion by the end of 2018 — half of which is targeted for 2017.

Analysts had expected to see better full-year results than 2015 and a portion of Barrick’s debt paid down after it launched an aggressive turnaround plan in 2015. They projected that assets sales and improved cash flow would help Barrick cut its debt in half this year through selling more noncore assets and investing in new partnerships.

Revenue earned during the October-December quarter totalled US$2.32 million, beating projections of US$2.23 billion and up 3.6 per cent from the year-earlier quarter.

For the full year, Barrick’s net earnings were US$655 million, or 56 cents per share, a stark improvement from the US$2.84 billion, or US$2.44 per share, loss it recorded in 2015.

Adjusted earnings of US$818 million, or 70 cents per share, were largely in line with analysts’ expectations.

Revenue totalled US$8.56 billion, also in line with analysts’ estimates. The results also beat its targets for the year.

The company’s full-year, all-in sustaining costs fell 12 per cent to US$730 per ounce, lower than previously expected, on production of 5.52 million ounces at its 16 mines: the high end of its 5.25 to 5.55 million ounce guidance.

The company previously announced annual gold production in 2016 fell by nearly 10 per cent and copper production was down about 19 per cent compared to the year before, largely due to the company’s decision to sell off some noncore mines.

The company’s board of directors approved an increase in its quarterly dividend from two cents to three cents per share.

Earlier Wednesday, Reuters reported that Soros Fund Management LLC, the firm owned by philanthropist billionaire George Soros, divested all of its shares during the most recent quarter amid a 3 ½-year low in the price of gold.

RESULTS REFLECT OUR ONGOING FOCUS ON CAPITAL DISCIPLINE.