Barrick Earns $53 Million-$0.10 per Share-in Second Quarter. Higher Production and Lower Costs Expected for Second Half of Year.
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Barrick Earns $53 Million-$0.10 per Share-in Second Quarter. Higher Production and Lower Costs Expected for Second Half of Year.
TORONTO -- Barrick Gold Corporation (NYSE:ABX)(TSX:ABX)(LSE:BGD)(SWX:ABX)(BOURSE:ABX)
SECOND QUARTER REPORT 2005 - JULY 28, 2005 Based on US GAAP and expressed in US dollars Highlights - Second-quarter 2005 net income was $53 million, or $0.10 per share, and cash flow from operations was $101 million, or $0.19 per share, compared to net income of $34 million, or $0.06 per share, and cash flow from operations of $108 million, or $0.20 per share, in the prior-year period. Second-quarter 2005 cash flow from operations was reduced by $15 million, or $0.03 per share, due to increases in supplies and ore stockpiles inventories at our new mines and projects. - Second-quarter gold sales were 1.1 million ounces at a total cash cost of $243 per ounce(1). The Company remains on track with its original guidance to produce between 5.4 - 5.5 million ounces of gold for the year at an average total cash cost of about $225 per ounce(2). The second half of 2005 is expected to have higher production and lower cash costs with Lagunas Norte in operation and a stronger operating performance expected at Goldstrike. - The Lagunas Norte mine achieved start-up during the quarter, ahead of the original third-quarter schedule and within its $340-million budget, and will be a significant contributor to the Company's gold production for the second half of 2005 and in the years to come. - Significant progress continues to be made on the remaining development projects. Veladero is on schedule to commence production in the fourth quarter of this year and Cowal is expected to pour its first gold in the first quarter of 2006. - During the quarter, the Company increased its investment in Highland and acquired an interest in Diamondex, which it subsequently increased in early July. Barrick currently holds 20% and 14% of the outstanding shares of Highland and Diamondex, respectively. Barrick Gold Corporation today reported earnings of $53 million ($0.10 per share) and operating cash flow of $101 million ($0.19 per share) for second quarter 2005 compared to earnings of $34 million ($0.06 per share) and operating cash flow of $108 million ($0.20 per share) in the year-earlier period. "Eighteen months ago we embarked on an aggressive growth program without comparison in the industry. As of today, two of the four new mines are in production, and we are substantially advanced on the other two," said Greg Wilkins, President and Chief Executive Officer. "The Company is now entering the phase of reaping benefits and delivering value to our shareholders." In second quarter 2005, earnings were favorably impacted by a $52-per-ounce higher realized gold price, and lower interest and amortization expense compared to the prior-year period, offset by lower gold sales volumes due to lower production levels and higher total cash costs. The Company's second-quarter 2005 earnings also included a number of special items, including a change in accounting policy for stripping costs as described below, with a positive effect totaling $24 million post-tax ($0.05 per share), compared to a positive effect of $34 million in the prior-year quarter ($0.06 per share). See page 8 of Management's Discussion and Analysis for further details. Operating cash flow in second quarter 2005 was negatively impacted by $15 million due to an increase in supplies and ore stockpiles inventories at our new mines and development projects. During the second quarter, the Company adopted a new accounting pronouncement on stripping costs incurred during the production stage of a mine (EITF 04-6). As a result, second-quarter results include a $10-million post-tax ($0.02 per share) credit in earnings and $6 per ounce reduction in total cash costs statistics. For the first half of 2005, there was a $19-million post-tax ($0.04 per share) credit to earnings, and lower total cash costs statistics of $8 per ounce. In accordance with EITF 04-6, cost of sales and related total cash costs per ounce statistics for 2004 and prior periods have not been restated and are therefore not comparable to current-year results and statistics. The Company expects the impact of this new policy to reduce cost of sales and therefore total cash costs statistics by approximately $8 per ounce for the full year 2005. See page 18 of Management's Discussion and Analysis for further details. Furthermore, the Company has commenced including accretion expense in its definition of total cash costs per ounce which had the effect of increasing reported total cash costs statistics by $3 per ounce in the second quarter, year-to-date and for all comparable periods in 2004. This change was made to conform total cash cost statistics more closely with US GAAP. The expected impact of this change is to increase total cash costs by $3 per ounce for the full year in 2005. The Company expects total cash costs to be about $225 per ounce, at the top end of original guidance for the year, after adjusting for these n...See the full content of this document
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