TORONTO – Barrick Gold Corp. is looking at its projects in Nevada — the state that helped make the company — for growth as it continues to cut costs and focus its operations, chief executive CEO Jamie Sokalsky said Thursday.
Nevada is home to some of Barrick’s largest operations, including its massive Goldstrike and Cortez mines, although much of the company’s attention in recent years has been on its troubled operations scattered around the globe.
Sokalsky, who will step down next month, said the Goldrush project in Nevada, is located just six kilometres away from its Cortez Hills mine.
“This is an area that has significant existing infrastructure and which has produced some 18 million ounces to date,” Sokalsky told a conference call with financial analysts.
“We’ve doubled the size of the total resource at Goldrush twice since we announced it three years ago and it currently stands at nearly 16 million ounces and we haven’t yet found the edges of the deposit.”
The renewed focus on exploration in the state follows billions in impairment charges last year related to the value of many of its projects, including its massive Pascua-Lama project high in the Andes on the border between Chile and Argentina, that has been put on hold.
In an effort to cut costs, the company also has slimmed its portfolio to 19 mines, compared with 27 in 2012, with the sale of several underperforming operations.
In addition to Goldrush, Sokalsky said the company was working in Nevada to advance its South Arturo project, extend the ore body at Cortez Hills and expand its Turquoise Ridge mine.
RBC Capital Markets analyst Stephen Walker said Nevada holds upside production potential for the company.
He noted the quarterly results were slightly weaker than expected as gold production was slightly below his forecast and costs were better than his estimates.
“Weaker than expected copper production with higher costs appears to be the main contributor to the weaker financial results,” Walker wrote in a note to clients.
Barrick reported after the close of markets Wednesday that it lost US$269 million or 23 cents per share on $2.43 billion in revenue for the quarter ended June 30. That compared with a loss of $8.56 billion or $8.04 per share on $3.2 billion in revenue a year ago.
The loss included a $514-million writedown of the Jabal Sayid copper project in Saudi Arabia, partially offset by other items.
Barrick recently signed to deal to form a 50-50 joint venture with Saudi Arabian Mining Co. (Ma’aden) to operate Jabal Sayid. Under the agreement, Ma’aden has agreed to pay $210 million for its stake in the project.
Barrick reported an adjusted profit of $159 million or 14 cents per share for the quarter, compared with an adjusted profit of $663 million or 66 cents per share a year ago.
The company attributed its reduced adjusted profit to lower gold and copper prices, as well as lower sales volumes compared with the second quarter of 2013.
The company sold 1.5 million ounces at an average realized gold price of $1,289 per ounce in the quarter, compared with 1.8 million ounces at an average realized price of $1,411 per ounce a year ago. Barrick reported an all-in sustaining cost of $865 per ounce, down from $910 in the second quarter of 2013.
The company reduced its 2014 guidance for its all-in sustaining costs per ounce to between $900 and $940, down from earlier expectations for between $920 and $980. The company’s adjusted operating cost guidance was also cut to between $580 and $630 per ounce, down from between $590 and $640.
The gold miner also cut is capital expenditure guidance to between $2.2 billion and $2.5 billion from between $2.4 billion and $2.7 billion.