2017 Year End Report and Fourth Quarter Results
2017 YEAR END REPORT AND FOURTH QUARTER RESULTS All amounts expressed in U.S. dollars unless otherwise indicated
Barrick Reports 2017 Full Year and Fourth Quarter Results
- In 2017, Barrick reported net earnings attributable to equity holders of Barrick (“net earnings”) of $1.44 billion ($1.23 per share), and adjusted net earnings1 of $876 million ($0.75 per share).
- The Company reported annual revenues of $8.37 billion, net cash provided by operating activities (“operating cash flow”) of $2.07 billion, and free cash flow2 of $669 million.
- Full year gold production was 5.32 million ounces. Cost of sales applicable to gold3 was $794 per ounce, and all-in sustaining costs4 were $750 per ounce. Copper production was 413 million pounds, at a cost of sales3 of $1.77 per pound, and all-in sustaining costs6 of $2.34 per pound.
- Total debt was reduced by $1.51 billion, or 19 percent, to $6.4 billion. We intend to reduce total debt to around $5 billion by the end of 2018.
- Proven and probable gold reserves were 64.5 million ounces5 as of December 31, 2017, primarily reflecting the reclassification of Pascua-Lama reserves to resources. Through increased investment in mine exploration drilling, the Company more than replaced the reserves it depleted through production at existing operations in 2017.
- Proven and probable copper reserves, including copper contained within gold reserves, were 11.2 billion pounds5 as of December 31, 2017, and include the addition of approximately 2.6 billion pounds at Lumwana as a result of successful cost reduction efforts.
- Barrick reported a net loss of $314 million ($0.27 per share) in the fourth quarter, and adjusted net earnings1 of $253 million ($0.22 per share).
- Fourth quarter revenue was $2.23 billion, operating cash flow was $590 million, and free cash flow2 was $240 million.
- Gold production in the fourth quarter was 1.34 million ounces, at a cost of sales applicable to gold3 of $801 per ounce, and all-in sustaining costs4 of $756 per ounce. Copper production in the fourth quarter was 99 million pounds, at a cost of sales3 of $1.79 per pound, and all-in sustaining costs6 of $2.51 per pound.
- Gold production guidance for 2018 is 4.5-5.0 million ounces, at a cost of sales applicable to gold3 of $810-$850 per ounce, and all-in sustaining costs4 of $765-$815 per ounce. Copper production guidance for 2018 is 385-450 million pounds, at a cost of sales3 of $1.80-$2.10 per pound, and all-in sustaining costs6 of $2.30-$2.60 per pound.
- Based on our current asset mix, from 2019 to 2022 we expect average annual gold production to be between 4.2-4.6 million ounces, at an average cost of sales3 of $850-$980 per ounce, and average allin sustaining costs4 of $750-$875 per ounce.
- Investor Day will be webcast on February 22 at www.barrick.com. Please join us for additional insights on our operations, projects, and other priorities.
TORONTO, February 14, 2018 — Barrick Gold Corporation (NYSE:ABX)(TSX:ABX) (“Barrick” or the “Company”) today reported fourth quarter and full year results for the period ending December 31, 2017.
In 2017, Barrick generated operating cash flow of $2.07 billion, and free cash flow2 of $669 million. Cost of sales applicable to gold3 of $794 per ounce declined slightly compared to 2016, while all-in sustaining costs4 rose by approximately three percent to $750 per ounce, reflecting a planned increase in minesite sustaining capital expenditures. Gold cash costs4 fell by 3.7 percent, driven by a favorable sales mix, and the ongoing impact of initiatives to improve the productivity and efficiency of our operations. Lower free cash flow compared to 2016 was primarily the result of lower production and higher working capital, in part due to the temporary suspension of operations at our Veladero mine in Argentina, and the concentrate export ban impacting Acacia Mining plc’s operations in Tanzania. Higher capital expenditures in 2017 also reflected planned investments in our organic project pipeline, as we invest more in the future of our business.
In 2017, we reduced our total debt by $1.51 billion, or 19 percent, exceeding our target of $1.45 billion. We maintained our focus on capital discipline, with total capital expenditures of $1.36 billion, near the low end of our guidance range for the year. We are advancing a pipeline of high-confidence, organic projects with the potential to contribute more than one million ounces of annual production to Barrick, at costs well below our current portfolio average. At the same time, we returned more capital to shareholders, with a 50 percent increase in our quarterly dividend, to $0.03 per share. Finally, we forged a new strategic partnership with Shandong Gold at the Veladero mine, a landmark agreement with the potential to create significant long-term value for our owners, as well as our community and government partners in Argentina and beyond.
STRATEGIC FRAMEWORK
Over the past three years, we have optimized our portfolio by divesting high-cost, non-core operations. We used the proceeds of these divestments to reduce our total debt by more than 50 percent, from $13.1 billion at the end of 2014, to $6.4 billion today. Our portfolio is now focused on high-margin, long-life gold operations and projects clustered in core districts throughout the Americas, with a materially stronger balance sheet.
Our overriding objective remains unchanged. We are focused on growing free cash flow per share over the long term, which we will do primarily in three ways. First, we will drive industry-leading margins through operational excellence and consistent execution. Second, we will manage our portfolio and allocate capital with discipline and rigor. Third, we will leverage top talent and our distinctive partnership culture as competitive advantages.
Our priorities for 2018 are consistent. We will maintain our focus on maximizing free cash flow, and seek to build a business that can generate positive free cash flow at a gold price of $1,000 per ounce, on a sustainable basis. We will drive operational excellence through a continuous cycle of optimization, pushing our mines to achieve greater levels of efficiency and productivity, while working to mitigate increasing costs associated with more complex ore types and a shift to more underground mining. This will be aided by investments in digital technology and innovation, which will allow us to identify and accelerate further operational improvements across our portfolio. We will maintain a sharp focus on capital discipline while further strengthening the balance sheet. We will continue to optimize and advance our organic project pipeline. And finally, we will focus on attracting top talent to Barrick and developing our people to achieve their full potential in the Company’s decentralized operating model.
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OUTLOOK
All investment decisions are driven by our primary objective of growing free cash flow over the long term, not ounces. Our production profile will adjust up or down according to what best advances this objective. All projects undergo rigorous scrutiny by our Investment Committee at every stage of evaluation and development. Each project is benchmarked against a 15 percent hurdle rate using a long-term gold price of $1,200 per ounce, and ranked accordingly.
In 2018, we expect to produce 4.5-5.0 million ounces of gold, at a cost of sales applicable to gold3 of $810- $850 per ounce, and all-in sustaining costs4 of $765-$815 per ounce. Higher cost guidance for 2018 primarily reflects lower anticipated gold production from Barrick Nevada, Pueblo Viejo and Veladero, increased processing of higher-cost inventory, and higher costs at Acacia. We expect first quarter production of around one million ounces at costs that will be proportionately higher than those anticipated for the remainder of the year, largely due to lower grades at Barrick Nevada, and the timing of planned maintenance at Pueblo Viejo.
Total attributable capital expenditures for 2018 are expected to be in the range of $1.40-$1.60 billion. This includes project capital expenditures of $450-$550 million, an increase of roughly $270 million compared to 2017, as we increase investments in the future of our business. Attributable mine site sustaining capital expenditures are expected to be in the range of $950 million-$1.1 billion, compared to $1.1 billion in 2017, reflecting our ongoing focus on capital efficiency and discipline.
In 2018, we expect corporate administration costs to be approximately $275 million, an increase of roughly $75 million compared to 2017. This reflects additional investments to optimize our enterprise-wide processes and systems, to accelerate the implementation of digital technologies across our business, and to drive stepchange innovations, all of which are designed to reduce operating costs and increase productivity across the business over the long term.
Based on our current asset mix, from 2019 to 2022 we expect average annual gold production to be between 4.2-4.6 million ounces, at an average cost of sales3 of $850-$980 per ounce, and average all-in sustaining costs4 of $750-$875 per ounce, representing a stable base case for our business. This includes contributions from feasibility level projects at Goldrush, Cortez Deep South, Turquoise Ridge, and Lagunas Norte—but assumes no contribution from Pascua-Lama, Donlin Gold, Cerro Casale, or Alturas. Please join us for our Investor Day webcast on February 22 for additional insights on our production profile.
Our aspiration is to have the most efficient and productive gold mines in the industry, and as such, we have challenged ourselves to continually improve our cost profile. It is equally important that we reinvest in the future of our business now, to ensure that we generate sustainable value for our owners over the long term, at the lowest possible costs. In support of this, we are increasing our investments in organic projects and mine exploration drilling, which will strengthen the overall quality of our portfolio. We also are investing in digital systems and innovation, which we expect will drive down costs and improve productivity over the long term.
Please see Appendix 1 for detailed operating and capital expenditure guidance. The table found in Appendix 2 outlines the material assumptions used to develop the forward-looking statements in our outlook and guidance, and provides an economic sensitivity analysis of those assumptions. For certain related risk factors, please see the cautionary statement on forward-looking information at the end of this press release.
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FINANCIAL HIGHLIGHTS
Full year net earnings were $1.44 billion ($1.23 per share), compared to net earnings of $655 million ($0.56 per share) in 2016. This significant improvement in net earnings was primarily due to $2.03 billion ($1.43 billion net of tax and non-controlling interest) in impairment reversals and gains on sale related to the divestment of 50 percent of the Veladero mine and 25 percent of the Cerro Casale project in 2017. This was partially offset by net impairment charges of $908 million ($511 million net of tax and non-controlling interest) mainly relating to Acacia’s Bulyanhulu mine, which has been placed on reduced operations, and the Pascua-Lama project, where proven and probable gold reserves have been reclassified as measured and indicated resources, coupled with an impairment reversal at the Lumwana mine.
In 2017, adjusted net earnings1 increased by seven percent to $876 million ($0.75 per share), compared to $818 million ($0.70 per share) in 2016. Adjusted net earnings benefited from higher gold and copper prices, combined with lower direct mining costs, reflecting higher capitalized waste stripping at Barrick Nevada and Veladero, a lower relative sales contribution from higher cost operations at Acacia, and lower inventory writedowns compared to 2016. These gains were partially offset by lower sales volumes, primarily due to the sale of 50 percent of Veladero, and the concentrate export ban impacting Acacia’s operations, combined with an increase in exploration and evaluation costs, investments in innovation, higher income tax expense, and higher depreciation expense.
Please refer to page 70 of our fourth quarter MD&A for a full list of reconciling items between net earnings and adjusted net earnings for the current and prior year.
Operating cash flow in 2017 was $2.07 billion, compared to $2.64 billion in 2016. This decrease reflects working capital outflows related to the buildup of inventory at Pueblo Viejo, Lagunas Norte, and Acacia, lower gold sales driven by the sale of 50 percent of the Veladero mine on June 30, 2017, and lower sales volumes at Pueblo Viejo, Hemlo, Turquoise Ridge, Lagunas Norte, and Acacia. Operating cash flow was also impacted by an increase in exploration, evaluation and project expenses, lower operating cash flows attributed to non-controlling interest, and higher cash taxes paid. These declines were partially offset by higher sales from Barrick Nevada, which benefited from operational efficiencies and improved throughput, higher gold and copper prices, and lower direct mining costs (as described above).
Free cash flow2 for 2017 was $669 million, compared to $1.51 billion in the prior year. The decrease primarily reflects lower operating cash flows combined with higher capital expenditures. In 2017, capital expenditures on a cash basis were $1.40 billion compared to $1.13 billion in 2016. Higher capital spending reflects a $161 million increase in minesite sustaining capital expenditures, primarily at Barrick Nevada and Veladero, partially offset by a decrease in sustaining capital at Acacia. Project capital expenditures also increased by $109 million, reflecting the development of Crossroads and the Cortez Hills Lower Zone at Barrick Nevada, and Goldrush project drilling, partially offset by a decrease in pre-production stripping at the South Arturo pit, which entered commercial production in August 2016.
RESTORING A STRONG BALANCE SHEET
Achieving and maintaining a strong balance sheet remains a top priority. In 2017, we reduced our total debt by $1.51 billion, or 19 percent, exceeding our original target of $1.45 billion.
Our goal remains to reduce our total debt from $6.4 billion at present, to around $5 billion by the end of 2018. We plan to achieve this primarily by using cash flow from operations and cash on hand, and potentially through
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further portfolio optimization. Barrick will continue to pursue debt reduction with discipline, taking only those actions that make sense for the business, on terms we consider favorable to our shareholders.
At the end of the fourth quarter, Barrick had a consolidated cash balance of approximately $2.2 billion.7 The Company has less than $100 million in debt due before 2020.8 More than three-quarters of our outstanding total debt of $6.4 billion does not mature until after 2032.
OPERATING HIGHLIGHTS
In 2017, our operations produced 5.32 million ounces of gold, at a cost of sales3 of $794 per ounce, and allin sustaining costs4 of $750 per ounce, with a particularly strong performance from Barrick Nevada. This compares to production of 5.52 million ounces of gold in 2016, at a cost of sales3 of $798 per ounce, and all-in sustaining costs4 of $730 per ounce. Lower production in 2017 primarily reflects the sale of 50 percent of the Veladero mine on June 30, and lower production from Acacia as a result of Tanzania’s concentrate export ban.
Our most important operational priorities are to ensure the safety of people and the environment. We improved our safety performance in 2017, achieving a total reportable injury frequency rate (TRIFR)9 of 0.35—the best result in the Company’s history, and among the lowest in the industry. Regrettably, this was overshadowed by the tragic deaths of two team members in workplace accidents in 2017: Williams Garrido, a contractor at the Pascua-Lama project; and Eulogio Gutierrez, an employee at our Hemlo mine. We will not be satisfied with our performance until we can say that every person at Barrick has gone home safe and healthy every day, and this will remain our focus in 2018.
Consistent with our overall improvement trend in safety, we also achieved a 38 percent reduction in reportable environmental incidents at our operations last year, from 13 incidents in 2016, to eight incidents in 2017. Despite this success, a pipe rupture at the leach pad of our Veladero operation in March 2017 resulted in a three-and-a-half month suspension of processing operations at the mine. In response, Veladero implemented a series of measures to strengthen the mine’s operating systems, including major modifications to the heap leach facility, as well as initiatives to improve community engagement, training, and local hiring.
On a per ounce basis, cost of sales applicable to gold3 declined slightly compared to 2016. All-in sustaining costs4 increased by three percent, primarily reflecting an increase in minesite sustaining capital expenditures. At the same time, we reduced our cash costs4 by 3.7 percent, from $546 per ounce in 2016, to $526 per ounce in 2017, reflecting a favorable sales mix, as well as our ongoing focus on driving Best-in-Class productivity and efficiency improvements across our portfolio.
Gold production in the fourth quarter was 1.34 million ounces, at a cost of sales applicable to gold3 of $801 per ounce, and all-in sustaining costs4 of $756 per ounce, compared to 1.52 million ounces, at a cost of sales3 of $784 per ounce, and all-in sustaining costs4 of $732 per ounce in the prior-year period.
In 2017, our copper portfolio produced 413 million pounds, at a cost of sales3 of $1.77 per pound, and all-in sustaining costs6 of $2.34 per pound. Production was slightly below the Company’s adjusted guidance of 420-440 million pounds for 2017, but in line with our original full year guidance of 400-450 million pounds. This compares to production of 415 million pounds, at a cost of sales3 of $1.41 per pound, and all-in sustaining costs6 of $2.05 per pound in 2016.
Copper production in the fourth quarter was 99 million pounds, at a cost of sales3 of $1.79 per pound, and all-in sustaining costs6 of $2.51 per pound, compared to 101 million pounds, at a cost of sales3 of $1.43 per pound, and all-in sustaining costs6 of $2.04 per pound in the prior-year period.
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Cost of sales applicable to copper3 increased by 25 percent in 2017 as a result of higher power, fuel, consumables and contractor costs, combined with higher depreciation expense at Lumwana. Copper all-in sustaining costs6, which have been adjusted to include our proportionate share of equity method investments, were 14 percent higher than the prior year, primarily as a result of higher cost of sales and higher minesite sustaining capital expenditures at Lumwana and Jabal Sayid.
Turquoise Ridge Toll Milling Agreement
In January 2018, Barrick and Newmont Mining Corporation (“Newmont”) reached a new, seven-year toll milling agreement for the processing of Turquoise Ridge ore at Newmont’s Twin Creeks facility. The agreement supports plans to expand production and unlock the full potential of Turquoise Ridge by increasing processing capacity. It provides for throughput of 850,000 tons per year in 2018 and 2019, rising to 1.2 million tons per year between 2020 and 2024. Processing costs are in line with market rates, and are reflected in our guidance for Turquoise Ridge.
Please join our upcoming Investor Day webcast for a detailed update on all major operations. Visit www.barrick.com for webcast information, press release, and presentations on February 22.
Digital Barrick
During 2017, we laid the foundation for our digital transformation through a series of pilot projects primarily focused at our Cortez mine in Nevada. This allowed us to validate the viability of our digital solutions and their potential economic returns in a controlled environment with rigorous oversight.
In 2018, our digital strategy will focus on completing version one of the Barrick Data Fabric, an enterprisegrade, big data analytics platform. This will provide a unified data environment for the Company that will allow our leaders and operators to identify variability and trends, generate trusted, real-time data, predict failures, and take action to address problems quickly, or before they arise. We also will accelerate the implementation of digital projects across our other operations, with an initial focus in Nevada, including:
- Expanded use of automated processing systems, combined with introduction of artificial intelligence;
- Implementation of short interval control in open pit, underground, and processing areas;
- Expanded implementation of digital work management and predictive maintenance systems; and
- Expanded use of automation, including an autonomous open pit trial, and the implementation of automated underground drills.
We are taking a disciplined approach to our digital strategy and will continue to apply a high degree of rigor to these projects, just as we would for any other investment, to ensure that our investments in digital deliver the benefits we anticipate.
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| Fourth Quarter | Full Year | 2018 | |
| Gold | 2017 | 2017 | Guidance |
| Production10(000s of ounces) | 1,339 | 5,323 | 4,500 - 5,000 |
| Cost of sales applicable to gold3($ per ounce) | 801 | 810 - 850 |
All-in sustaining costs4 ($ per ounce) 756 750 765 - 815
Copper
Production10 (millions of pounds) 99 413 385 - 450 Cost of sales applicable to copper3 ($ per pound) 1.79 1.80 - 2.10 1.77 All-in sustaining costs6 ($ per pound) 2.51 2.34 2.30 - 2.60
Total Attributable Capital Expenditures11 ($ millions) 365 1,364 1,400 - 1,600
MINERAL RESOURCE MANAGEMENT
Barrick manages a high-quality inventory of gold reserves and resources, the majority of which are situated in regions where we have proven operating experience, a critical mass of infrastructure, technical and exploration expertise, and established partnerships with suppliers, host governments, and communities.
Our 2017 reserves were calculated using a gold price assumption of $1,200 per ounce, consistent with the long-price assumption we used in 2016. As of December 31, 2017, Barrick’s proven and probable gold reserves were 64.5 million ounces5, compared to 86.0 million ounces at the end of 2016. This decline primarily reflects the divestment of approximately 9.2 million ounces associated with Veladero and Cerro Casale, and the reclassification of approximately 14.0 million ounces of Pascua-Lama proven and probable gold reserves as measured and indicated resources.
Barrick added 8.0 million ounces of proven and probable gold reserves at existing operations (as well as the Goldrush project) through drilling, more than replacing the 6.2 million ounces depleted through processing last year. This success reflects increased investment in mine exploration drilling in 2017. Significant additions included 2.1 million ounces at Turquoise Ridge, 1.4 million ounces at Cortez, 1.3 million ounces at Goldstrike, 397,000 ounces at Hemlo, and 392,000 ounces at Lagunas Norte. We also declared an initial reserve of 1.5 million ounces at the Goldrush project. In addition, Barrick’s 63.9 percent share of reserves at Acacia’s North Mara mine increased by 504,000 ounces. The average grade of Barrick’s reserves also increased by 17 percent, from 1.33 grams per tonne, to 1.55 grams per tonne.
In 2017, measured, indicated, and inferred gold resources were calculated using a gold price assumption of $1,500 per ounce, consistent with 2016. Measured and indicated gold resources increased to 88.6 million ounces5 at the end of 2017, compared to 75.2 million ounces at the end of 2016. Roughly 9.1 million ounces of measured and indicated gold resources were added as a result of the formation of the Norte Abierto joint venture (which includes the Cerro Casale and Caspiche deposits), net of resources divested at Cerro Casale and Veladero. Roughly 14.0 million ounces of measured and indicated resources were added as a result of the reclassification of Pascua-Lama reserves to resources, and 5.8 million ounces were added through drilling, including 1.5 million ounces at Goldstrike, 1.2 million ounces at Cortez, and 535,000 ounces at Hemlo.
Inferred gold resources increased slightly to 30.8 million ounces5 at the end of 2017, compared to 30.7 million ounces at the end of 2016.
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Proven and probable copper reserves were calculated using a copper price of $2.75 per pound, consistent with the long-price assumption we used in 2016. Copper reserves, including copper within gold reserves, increased to 11.2 billion pounds5 at the end of 2017, compared to 11.1 billion pounds at the end of 2016. The Lumwana mine added approximately 2.6 billion pounds to its reserves as a result of successful cost reduction efforts. Approximately 1.4 billion pounds of copper reserves were divested with the sale of 25 percent of Cerro Casale, 554 million pounds were processed, and 505 million pounds of copper contained within gold reserves were reclassified as copper contained within gold resources.
In 2017, measured, indicated, and inferred copper resources were calculated using a copper price assumption of $3.50 per pound, consistent with 2016. Measured and indicated copper resources, including copper within measured and indicated gold resources, increased to 11.7 billion pounds5, compared to 9.7 billion pounds at the end of 2016. Approximately 2.6 billion pounds of measured and indicated copper resources were upgraded to copper reserves, 2.6 billion pounds were added through the inclusion of the Caspiche deposit, and 1.6 billion pounds were added through drilling. Inferred copper resources were 3.0 billion pounds5, compared to 3.1 billion pounds at the end of 2016.
EXPLORATION UPDATE
Barrick has a demonstrated track record of creating value through exploration. Since 1990, we have found 129 million ounces of gold at an overall discovery cost of $29 per ounce, or roughly half the average finding cost across the industry.
Approximately 80 percent of our total exploration budget of $185-$225 million is allocated to the Americas. Our exploration programs balance high-quality brownfield projects, greenfield exploration, and emerging discoveries that have the potential to become profitable mines.
We successfully added 8.0 million ounces of gold reserves in 2017 through mine exploration drilling, demonstrating that even well-established operations continue to yield exploration success. In many cases, these ounces can be quickly incorporated into mine plans, driving improvements in production, cash flow, and earnings.
For example, we drilled more than 18,000 meters at Goldstrike in 2017, adding 1.3 million ounces of proven and probable gold reserves, and 1.5 million ounces of measured and indicated resources. This drilling identified a host of high grade extensions to known lodes that will be a focus for further drilling in 2018. We also increased proven and probable gold reserves at Turquoise Ridge by 2.1 million ounces. Drilling down plunge of the mine’s Foot Wall Pond Trend showed strong indications that the mineralized system continues along this corridor.
Our 2018 greenfield exploration program will focus on the prolific Cortez district in Nevada, and the Frontera District on the El Indio Belt in Argentina and Chile. We have also cultivated active partnerships with a number of junior exploration and development companies as we seek to identify potential new core mineral districts for the Company. These partnerships are with ATAC at the Orion project in the Yukon, with Osisko at the Kan property in northern Québec, and with Premier Gold at Cove McCoy in Nevada.
PROJECTS UPDATE
Please join our upcoming Investor Day webcast for the latest updates on all major projects. Visit www.barrick.com for webcast information, press release, and presentations on February 22.
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We continue to advance a pipeline of high-confidence projects at or near our existing operations, with the potential to contribute more than one million ounces of annual production to Barrick, at costs well below our current portfolio average.
Goldrush has the potential to become Barrick’s newest underground mine in Nevada, with first production expected as early as 2021, and sustained production by 2023. The prefeasibility study estimated average production of approximately 450,000 ounces of gold per year, at an average cost of sales3 of $800 per ounce, and average all-in sustaining costs4 of $665 per ounce.
Through the development of a third shaft, the Turquoise Ridge Joint Venture in Nevada has the potential to increase production to an average of 500,000 ounces per year (100 percent basis) at a cost of sales3 of $750- $800 per ounce, and all-in sustaining costs4 of about $625-$675 per ounce.
The Deep South project at Cortez will expand mining below currently permitted levels, and is expected to contribute average production of more than 300,000 ounces of gold per year from the underground mine, with initial production as early as 2023. The prefeasibility study estimated average cost of sales3 of $840 per ounce, and average all-in sustaining costs4 of $580 per ounce.12
At the Lagunas Norte operation in Peru, we are evaluating a phased project to extend the life of the mine by approximately 10 years. The first component involves installing grinding and carbon-in-leach processing. The second involves installation of a flotation and pressure oxidation circuit, allowing us to optimize the timing of capital expenditures.13
We also maintain a portfolio of greenfield projects that represent significant long-term value and optionality for our shareholders.
Donlin Gold, located in Alaska, contains 19.5 million ounces5 of measured and indicated gold resources (Barrick’s 50 percent share). We continue to work in collaboration with our partners at NOVAGOLD to optimize the project, including the potential for a staged development and selective mining.
Pascua-Lama, located on the border between Argentina and Chile, contains 21.3 million ounces5 of measured and indicated gold resources. We are now evaluating an underground, block-caving operation at Pascua-Lama that would utilize processing infrastructure in Argentina, while reducing the project’s environmental impacts.
Norte Abierto, our new joint venture with Goldcorp in Chile, incorporates the Cerro Casale and Caspiche deposits. Cerro Casale contains 11.6 million ounces of proven and probable gold reserves5 (Barrick’s 50 percent share), while Caspiche contains 11.6 million ounces of measured and indicated gold resources5 (Barrick’s 50 percent share). Work is focused on advancing an optimized project design, including an updated geological model.
The Alturas project, located in Chile on the El Indio Belt, is a Barrick greenfield discovery with 6.8 million ounces5 of inferred gold resources as of December 31, 2017. Following completion of a scoping study for a conventional open pit heap leach operation at Alturas, we are now carrying out further studies to evaluate potential enhancements to the project design, while undertaking additional drilling to improve orebody knowledge and grades.
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ACACIA MINING PLC
In October 2017, the Government of Tanzania and Barrick announced a proposed framework agreement that would split economic benefits generated by Acacia’s operations with the Government of Tanzania on a 50/50 basis. The Government’s portion would be delivered primarily in the form of royalties, taxes, and a 16 percent free carried interest in Acacia’s Tanzanian operations, in line with the country’s new mining law. Discussions concerning the implementation of the proposed framework, resolution of outstanding tax matters relating to Acacia, and the lifting of the country’s export ban on concentrates, remain ongoing. Barrick has continued to engage with independent directors of Acacia throughout this process, and members of Acacia management are supporting ongoing discussions. We continue to target the first half of 2018 for the completion of a detailed proposal for review by Acacia.
TECHNICAL INFORMATION
The scientific and technical information contained in this press release has been reviewed and approved by Steven Haggarty, P. Eng., Senior Director, Metallurgy of Barrick, Patrick Garretson, Registered Member SME, Senior Director, Life of Mine Planning of Barrick, Rick Sims, Registered Member SME, Vice President, Reserves and Resources of Barrick, and Robert Krcmarov, FAusIMM, Executive Vice President, Exploration and Growth of Barrick, each a “Qualified Person” as defined in National Instrument 43-101 - Standards of Disclosure for Mineral Projects.
CONFERENCE CALL AND WEBCAST
Please join us for a conference call and webcast to discuss the results tomorrow, February 15, at 8:00 am ET.
Webcast: www.barrick.com Toll Free (U.S. and Canada): 1-800-319-4610 International: +1 416 915-3239
The conference call will be available for replay by phone at 1-855-669-9658 (U.S. and Canada toll free), and +1 604 674-8052 (international), access code 1928.
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Appendix 1 2018 Detailed Operating and Capital Expenditure Guidance
2018 GOLD PRODUCTION AND COSTS
All-in Production Cost of sales3 Cash costs4 sustaining costs4 (000s ounces) ($ per ounce) ($ per ounce) ($ per ounce)
Barrick Nevada 2,000 - 2,255 760 - 810 610 - 660 470 - 530
Pueblo Viejo (60%) 585 - 615 720 - 750 590 - 620 425 - 450
Lagunas Norte 230 - 270 780 - 910 670 - 780 420 - 490
Veladero (50%) 275 - 330 970 - 1,110 960 - 1,100 560 - 620
Turquoise Ridge (75%) 240 - 270 670 - 720 650 - 730 580 - 620
Porgera (47.5%) 230 - 255 950 - 1,000 950 - 1,000 780 - 830
Kalgoorlie (50%) 390 - 440 720 - 820 695 - 745 580 - 630
Acacia (63.9%) 275 - 305 970 - 1,020 935 - 985 690 - 720
Hemlo 200 - 220 860 - 920 975 - 1,075 740 - 790
Golden Sunlight 35 - 50 1,100 - 1,200 1,290 - 1,460 1,130 - 1,230
Total Gold14,15 4,500 - 5,000 810 - 850 765 - 815 540 - 575
2018 COPPER PRODUCTION AND COSTS
All-in Production Cost of sales3 C1 cash costs6 sustaining costs6 (millions of pounds) ($ per pound) ($ per pound) ($ per pound)
Zaldívar (50%) 115 - 130 2.30 - 2.50 2.05 - 2.25 ~1.70
Lumwana 230 - 265 1.65 - 1.90 2.50 - 2.80 1.65 - 1.90
Jabal Sayid (50%) 40 - 55 1.85 - 2.50 1.70 - 2.30 1.40 - 1.80
Total Copper 385 - 450 1.80 - 2.10 2.30 - 2.60 1.55 - 1.75
2018 CAPITAL EXPENDITURES
($ millions)
Mine site sustaining 950 - 1,100
Project 450 - 550
Total attributable capital expenditures11 1,400 - 1,600
2019 - 2022 GOLD PRODUCTION, COSTS, AND CAPITAL EXPENDITURES
All-in Total attributable Production14,15 Cost of sales3 capital expenditures11 sustaining costs4 (000s ounces) ($ per ounce)
($ millions) ($ per ounce)
Annual average 2019 - 2022 4,200 - 4,600 850 - 980 750 - 875 1,100 - 1,500
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Appendix 2 Outlook Assumptions and Economic Sensitivity Analysis
2018
Impact on Impact on Impact on 2018 guidance Hypothetical revenue cost of sales3 all-in sustaining assumption change
| (millions) | (millions) | costs4,6 | |||
|---|---|---|---|---|---|
| Gold revenue, net of royalties16 | $1,200/oz | +/- $100/oz | +/- $468 | +/- $14 | +/- $3/oz |
| Copper revenue, net of royalties17 | $2.75/lb | + $0.50/lb | + $205 | + $13 | + $0.03/lb |
| Copper revenue, net of royalties17 | $2.75/lb | - $0.50/lb | - $180 | - $12 | - $0.03/lb |
Gold all-in sustaining costs4
| WTI crude oil price16 | $55/bbl | +/- $10/bbl | n/a | +/- $26 | +/- $5/oz |
| Australian dollar exchange rate | 0.75 : 1 | +/- 10% | n/a | +/- $31 | +/- $7/oz |
| Argentine peso exchange rate | 18.35 : 1 | +/- 10% | n/a | +/- $7 | +/- $2/oz |
| Canadian dollar exchange rate | 1.25 : 1 | +/- 10% | n/a | +/- $35 | +/- $7/oz |
Copper all-in sustaining costs6
WTI crude oil price16 $55/bbl +/- $10/bbl n/a +/- $5 +/- $0.06/lb
Chilean peso exchange rate 650 : 1 +/- 10% n/a +/- $10 +/- $0.02/lb
2019 - 2022
Average annual Average annual Average annual Average annual 2019-2022 Hypothetical impact on impact on impact on guidance change revenue cost of sales3 all-in sustaining assumption (millions) (millions) costs4,6 Gold revenue, net of royalties16 $1,200/oz +/- $100/oz +/- $440 +/- $16 +/- $4/oz
Gold all-in sustaining costs4
| WTI crude oil price16 | $70/bbl | +/- $10/bbl | n/a | +/- $21 | +/- $5/oz |
| Australian dollar exchange rate | 0.75 : 1 | +/- 10% | n/a | +/- $25 | +/- $6/oz |
| Argentine peso exchange rate | 20.24 : 1 | +/- 10% | n/a | +/- $8 | +/- $2/oz |
| Canadian dollar exchange rate | 1.25 : 1 | +/- 10% | n/a | +/- $34 | +/- $8/oz |
| BARRICK YEAR-END 2017 | 12 | PRESS RELEASE |