Barrick Gold Cuts Costs to Deliver Sixth Straight Earnings Beat

Barrick Gold Corp., the most profitable major bullion producer in the past year, delivered a sixth straight earnings beat after lifting output and reducing costs. Its shares rose.

The Toronto-based miner navigated the pandemic to meet its full-year gold guidance, with the fourth-quarter bringing higher output and a 3.8% decline in costs compared with the third quarter. Barrick also said it achieved 76% replacement of its 2020 depleted reserves.

Chief Executive Officer Mark Bristow has managed to turn the world’s second-largest gold miner into one of the most profitable, with Barrick having the highest operating margin and the lowest ratio of debt to earnings among major producers. Surging gold prices have helped, and with bullion retreating so far this year, companies may have to work harder to retain investor interest.

Barrick Gold Cuts Costs to Deliver Sixth Straight Earnings Beat

One measure Barrick announced Thursday is a plan to give investors a capital distribution of 42 cents a share as part of the $1.5 billion in proceeds from selling assets including its stake in Australia’s Kalgoorlie mine in 2019. The total distribution of $750 million will be paid in three tranches. After acquiring Randgold Resources Ltd. in 2019, Barrick divested smaller, less profitable assets to focus on top-tier operations, with the latest deal -- the sale of an idled mine in Peru -- disclosed Tuesday.

Barrick shares climbed to $21.15 at 7:43 a.m. in New York before the start of regular trading, up 1.5% from Wednesday’s close of $20.83.

New Guidance

Gold output last year was 4.76 million ounces, within guidance that was revised after a dispute with Papua New Guinea’s government halted operations at the key Porgera mine in April. Barrick left Porgera out of its 2021 output forecast of 4.4 to 4.7 million ounces, which came in below the average analyst estimate of 4.77 million ounces. The guidance for all-in sustaining costs of $970 to $1,020 an ounce was ahead of the $926 consensus among analysts.

Fourth-quarter net income fell to $685 million, or 39 cents a share, from $1.39 billion, or 78 cents a year earlier. Adjusted per-share earnings of 35 cents exceeded the average analysts’ estimate of 31 cents and the year-ago result of 17 cents. Lower taxes helps explain the better-than-expected result, according to Credit Suisse analysts.

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