Barrick Gold to sell stake in Chilean copper mine

28 Apr 2015


The world's biggest gold miner, Canada's Barrick Gold Corp, plans to reduce its exposure to copper by selling a stake in its priced Zaldivar copper mine in Chile, aiming to reduce its $13-billion debt burden amid fall in its first quarter earnings.

Gold Bars

Yesterday, the gold miner reported a 35-per cent plunge in net income at $57 million in the first quarter, down from $88 million last year, on the back of dropping commodity prices. Revenues for the quarter fell 15-per cent to $2.24 billion from $2.65.

Average spot price for gold has reduced by 6 per cent to $1,219 an ounce in Q1 from $1,293 an ounce a year ago, while price for copper fell 17 per cent to $2.64 from $3.19, Barrick said.

The company said it is committed to reduce its $13-billion debt by at least $3 billion by the end of the year and moved quickly to advance a number of asset sales and joint venture opportunities.

Part sale of Zaldivar, one of Barrick's best cash flow generators, is expected to attract top bids and help the company to strengthen its balance sheet.

''Zaldívar is a consistently strong performer in the world's best jurisdiction for copper mining. Potential buyers have expressed a strong interest in acquiring an interest in the mine,'' Barrick said.

Earlier in February, the miner had put two of its gold mines on the block - the Cowal mine in Australia and Porgera mine in Papua New Guinea.

The company said numerous companies have participated in the sale processes and detailed due diligence on both the assets are underway.

Toronto-based Barrick is the world's largest gold mining company with significant presence in copper, with operations spread across five continents. The company holds large land positions on some of the most prolific and prospective mineral deposits of gold and copper.

The Zaldivar mine produced 52 million pounds of copper concentrate in the first quarter at cash costs of $1.77 per pound.

The mine's production target for 2015 is around 230-250 million pounds, nearly half of the company's overall anticipated copper production of 480-520 million pounds at cash costs of $1.75-2.00 per pound.

Barrick has kept its gold production guidance for 2015 at 6.2-6.6 million ounces at all in costs of $860-$895 an ounce.

''Barrick's focus is gold. As we have said, we have no plans to expand our existing copper position,'' the company said.

Although the gold miner has formed a joint venture with Santiago-based Quantum Pacific Exploration to explore for copper deposits, the company said the move was to maximise the value of its already-owned assets including large land positions in Chile in some of the world's most promising copper districts.

Barrick has announced a significant gold discovery at Alturas in Chile in the prolific El Indio belt, based on gold assay results of 1.64 to 4.4 grams per tonne.

The company has reduced its capital expenditure plans for 2015 by $100 million to $1.8-$2.1 billion.

Further to a proposed royalty hike to 20 per cent from 6 per cent in December by the Zambian government, Barrick said it would suspend its Lumwana copper mine. However, further to the government's revision of royalty to 9 per cent Barrick said the operation would remain cash positive at present copper prices.

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