Barrick Gold 2Q15 Earnings Call Notes

posted in: Notes | 0

Renewed focus on liquidity with the drop in gold price

“With the drop in the gold price below $1,100 an ounce, there’s a renewed focus on liquidity, which I’d like to address. As you can see, our near-term debt repayment schedule is quite modest, with less than $800 million due through 2017 currently, and that is improving. As Kelvin mentioned, we’ve already reduced our consolidated debt by approximately $250 million in the first half of 2015, and we also intend to redeem the outstanding $229 million principle amount of 2.9% notes due in 2016 with some of the proceeds from the sale of Cowal.”

Labor is biggest bucket of cash costs

“I won’t touch on all the components of our cash costs, but as you can see, labor is the biggest bucket. We’re reassessing and optimizing our mind-sight staffing levels to see where we can do more with less. Also at the site level, we are pleased to see some early improvements in productivity with some changes to the mining methods.”

Cash flow positive at $1100, have contingencies down to $900

“With the work we’ve already done to cut capital and align our spending on our 15% hurdle rate, all of our mines are free cash flow positive at $1,100 an ounce. Our mine general managers working with our technical services team have performed an analysis at prices down to $900 an ounce gold and developed specific plans to respond and maximize cash flow at the various levels.”

Set an aggressive debt reduction target and we’re hitting it

“In terms of debt reduction, we set an ambitious, aggressive target for 2015 which we thought was achievable, and as you indicated, we’re 90% there. We’ve also been clear that that’s not the end of the journey, and so we’ll continue that into 2016.”