Barrick Gold Corporation, the world’s second-largest gold miner after Newmont (ASX:NEM), joined its larger rival in benefiting from the surge in gold and copper prices during the three months to June.
Newmont received an added boost from the Newcrest takeover, which propelled its earnings to more than triple those of the previous year, reaching $US838 million in the June quarter.
While Barrick did not have the advantage of a takeover, the rise in gold prices significantly boosted its second-quarter revenue and earnings.
The company reported a 19 per cent increase in average realised gold prices to $US2,344 per ounce (from $US1,972 a year ago) and a 22 per cent increase in copper prices to $US4.53 per pound (from $US3.70 a year ago).
Although the copper surge has cooled in August, gold prices continue to climb, surpassing $US2,500 an ounce this week and setting the stage for another strong quarter for the company (and Newmont).
Barrick expects lower costs and increased production in the December half, which combined with the rising gold price, indicates a stronger six-month period ahead.
The company benefited from higher production at its Nevada and Papua New Guinea (Pogera) mines, with gold output reaching 948,000 ounces in the quarter ended June 30, surpassing analyst estimates of 905,800 ounces. This represents a slight increase of 8,000 ounces compared to the first quarter’s 940,000 ounces.
Barrick reaffirmed its annual gold production outlook of 3.9 million to 4.3 million ounces, compared to analyst expectations of 4 million ounces and the previous year’s 4.05 million ounces.
However, copper production declined to 43,000 tonnes in the June quarter from 48,000 a year ago, offsetting the increase in average prices.
For the second quarter, the company reported sales of $US3.162 billion compared to $US2.833 billion a year ago, and net profit of $US370 million compared to $US305 million a year ago.
For the six-month period, sales revenue totalled $US5.909 billion compared to $US5.476 billion a year ago, and net profit reached $US665 million, a 56 per cent increase from the previous year’s $US425 million.
Barrick expressed optimism about key projects aimed at boosting production and expanding its asset base in the medium term.
These include the recently permitted Goldrush mine in Nevada, which is expected to ramp up to annual production exceeding 400,000 ounces by 2028, and the adjacent Fourmile project, fully owned by Barrick, which has the potential to become a new Tier One mine producing over 500,000 ounces of gold per annum for more than two decades.
In the Dominican Republic, Pueblo Viejo is completing an expansion project designed to increase gold production to over 800,000 ounces beyond 2040.