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Barrick posts solid Q1, positively 'in line' with guidance

As the COVID-19 pandemic continues to roil global markets and dump the global economy into a recession, major gold miners reporting production results ‘in line’ with guidance has become the new ‘positive result’ amid a slew of forced mine and guidance suspensions, says BMO Capital Markets analyst Jackie Przybylowski.
Barrick posts solid Q1, positively 'in line' with guidance Barrick posts solid Q1, positively 'in line' with guidance Barrick posts solid Q1, positively 'in line' with guidance Barrick posts solid Q1, positively 'in line' with guidance Barrick posts solid Q1, positively 'in line' with guidance

Barrick Gold’s first-quarter production was in line with guidance

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This was the case with Canada's Barrick Gold, which reported March quarter production on Thursday in line with guidance and consensus estimates. It was one of the few miners to have reiterated its 2020 guidance despite the COVID-19 impacts on its portfolio, with the first-quarter result implying a run rate consistent with that target, Przybylowski said Thursday.

The company produced 1.25 million ounces of gold in the three-month period to March 31, and 115 million pounds of copper, which was respectively nearly 9% lower and 9% higher year-on-year. Sales in the most recent quarter were 1.22Moz gold and 110Mlb copper.

Barrick said it expected first-quarter gold production costs to come in on par with the December quarter, but guided for 12-14% lower copper cost of sales per pound after a major refurbishment at a third-party smelter that processes some of Lumwana's concentrate was completed. It will also drive C1 cash costs and copper all-in sustaining costs down by 17-19% and 27-29%, respectively, compared with the prior period, mainly owing to the increase in copper sales.

A slight negative was Barrick's disclosure that its first-quarter realised copper price is expected to be 12-14% below the average market price, mainly because of provisional pricing adjustments that reflect the downward trend in copper prices over the period.

While asset-level specifics were light in its production update, Przybylowski said Pueblo-Viejo (Barrick 60%, Newmont 40%), Loulo-Gonkuto and Kibali were "notable outperformers" versus BMO expectations, while Porgera underperformed.

In February, Barrick said it expected to produce between 4.8-5.2Moz gold and between 440-500Mlb copper this year.

CEO Mark Bristow said the company had implemented comprehensive programmes to counter the spread of COVID-19 and it had taken the necessary steps to manage the impact of the pandemic on its business. The company had provided financial aid and support to its host countries to strengthen their campaigns against the virus.

The Financial Times reported Wednesday the company bought 800,000 antibody test kits to screen workers and communities. Barrick has in recent weeks released highlights of its programmes in jurisdictions such as Nevada, Mali, Zambia, DRC, Tanzania, among others, detailing its efforts to keep employees and communities safe.

Barrick will report its first-quarter financial results before markets open on May 6.

Shares in Barrick (GOLD:NYSE) achieved a fresh 12-month high on Thursday, gaining a third in value in the year to date at US$24.69, which capitalises it at $44.5 billion.