Barrick Gold Corporation Q1 2010 Earnings Call Transcript

Barrick Gold Corporation Q1 2010 Earnings Call Transcript
By Seeking Alpha ,

Barrick Gold Corporation (ABX)

Q1 2010 Earnings Call

April 28, 2010 04:30 p.m. ET

Executives

Deni Nicoski - VP, IR

Aaron Regent - President and CEO

Jamie Sokalsky - EVP and CFO

Peter Kinver - EVP and COO

Patrick Garver - EVP and General Counsel

Analysts

John Bridges - JPMorgan

Haytham Hodaly - Salman Partners Inc.

Jorge Beristain - Deutsche Bank Securities

Anita Soni - Credit Suisse

David Haughton - BMO Capital Markets

Barry Cooper - CIBC World Markets

John Tumazos - Very Independent Research

Mark Liinamaa - Morgan Stanley

Stephen Walker - RBC Capital Markets

Heather Douglas - Thomas Weisel Partners

Greg Barnes - TD Newcrest

Presentation

Operator

Compare to:
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Welcome to the Barrick Gold Q1 2010 results conference call. (Operator Instructions) I would like now to turn the conference over to Deni Nicoski, Vice President of Investor Relations.

Deni Nicoski

Before we begin, I would bring to your attention the facts that we will be making forward-looking statements during the course of this presentation. For a complete discussion of the risks, uncertainties and factors which may lead to our actual financial results and performance being different from the estimates contained in our forward-looking statements, please refer to our yearend report or our most recent AIF filing.

With that, I'll hand it over to Aaron Regent, President and CEO of Barrick.

Aaron Regent

I'm joined here today by Jamie Sokalsky, Peter Kinver and Patrick Garver and other members of the senior management team here as well who will be available to answer questions later on in the call.

I'll start by covering some of the highlights of the quarter and also provide you with an update on our projects. Then I'll turn it over to Jamie to take you through our financial results in more detail and the reasons why we think and continue to believe that the gold outlook is quite positive. Then as I said, we'll take questions at the end of the presentation.

Well, operationally we have had a good start to this year. I think it sets us up nicely to achieve our guidance of higher production and lower costs in 2010. First quarter gold production was ahead of plan and up 19% from the prior year to about 2.1 million ounces at total cash costs of $442 per ounce or net cash costs of $342 per ounce.

Total cash costs were 9% lower than the first quarter of last year. And when we apply the credit for our copper sales, net cash costs were 15% lower than the prior-year quarter.

The strong operating results drove record net income of $758 million or $0.77 per share. And on an adjusted basis, net income was $741 million or $0.75 per share. Our operating cash flow more than tripled to a record $1.1 billion, reflecting the leverage that company has to strong gold prices.

During the quarter, we also completed our Cortez Hills project on time and in line with its budget. Our successful commissioning of this operation, combined with the U.S. District Court's decision to allow mining to continue, has positioned Cortez to be a key contributor to Barrick's 2010 results. And I'll discuss this project more in a few moments.

Our two world class projects, Pueblo Viejo in the Dominican Republic and Pascua-Lama on the border of Chile and Argentina, remain on schedule that are expected to come online with their respective capital budgets.

The company completed the acquisition of an additional 25% of Cerro Casale in Chile from Kinross, and we now have a 75% interest in the project and control of it. Cerro Casale is one of the world's largest undeveloped gold-copper deposits.

And during the quarter, the IPO for African Barrick Gold closed for total net proceeds of approximately $882 million, and Barrick now currently holds 74% interest in this new company.

Turning to a regional breakdown of our operating results, North America performed ahead of plan, producing 729,000 ounces at total cash costs of $519 per ounce.

Cortez is now complete and we're off to a very good start. The Cortez property made a significant contribution to the region, producing 275,000 ounces at a cash costs of $346 per ounce, and reflects earlier than anticipated access to ore and better than expected grades.

The Goldstrike operation also performed ahead of expectations with production of about 279,000 ounces at total cash costs of $581 per ounce, primarily as a result of better than anticipated open pit and underground grades and higher roaster throughput resulting from addressing the more fuel content of current ore.

Our South American business unit produced 659,000 ounces at total cash costs of $200 per ounce. Lagunas Norte exceeded plan with production of 330,000 ounces at total cash costs of $147 per ounce on recovery of higher grade leach pad inventory. The Veladero mine contributed 267,000 ounces at total cash costs of $247 per ounce. This reflects mining of higher grades and the impact of the crusher expansion which reached full capacity of 85,000 tons per day in March.

Australia Pacific produced 512,000 ounces at total cash costs of $598 per ounce. The Porgera mine performed on plan, producing 150,000 ounces at total cash costs of $493 per ounce.

The first quarter production from African Barrick Gold was 177,000 ounces at total cash costs of $616 per ounce. African Barrick remains on track with its full year guidance of 800,000 to 850,000 ounces, which translates to 650,000 to 690,000 ounces to Barrick's account at total cash costs of around $500 to $550 per ounce.

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