Barrick Mining (TSX: ABX) more than doubled its free cash flow in the third quarter, though softer gold prices cut into revenue and copper costs climbed well above the company’s full year guidance.
Revenue came in at US$5.07 billion, down 4% from US$5.29 billion in the second quarter, as the realized gold price slipped to US$4,243 per ounce from US$4,417. Net earnings attributable to shareholders rose 8% to US$1.32 billion, or US$0.80 per share, up from US$0.73. Adjusted EPS was unchanged at US$0.82.
Attributable adjusted EBITDA fell 3% to US$2.48 billion, while the margin held at 60%.
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Cash generation was the bright spot. Operating cash flow rose to US$2.49 billion from US$1.70 billion, and free cash flow reached US$1.17 billion, up from US$515 million a quarter earlier. Barrick ended September with US$5.59 billion in cash and US$4.68 billion in debt. That left net cash of US$909 million, down from US$1.25 billion, after the company spent US$761 million on share buybacks during the quarter.
Gold production rose 3% to 816,000 ounces. Loulo-Gounkoto was a key contributor, with output up 16% from the second quarter as its ramp up runs ahead of schedule. Extreme weather hurt Veladero, and delayed access to high grade material at North Mara pushed that ore into the fourth quarter. Copper output fell 11% to 50,000 tonnes.
Gold all in sustaining costs rose to US$1,911 per ounce from US$1,866, which still leaves a margin of more than US$2,300 per ounce at realized prices. Copper costs are a bigger concern. Copper AISC jumped to US$4.52 per pound from US$3.95, well above the full year guidance range of US$3.45 to US$3.75. At US$4.05 per pound, year to date copper AISC is already above the top of that range. Barrick blamed higher diesel prices and stronger local currencies, especially their effect on labour costs, but left its copper cost guidance unchanged.
The company reaffirmed its production targets as well. Gold output of 2.33 million ounces through nine months means Barrick needs 744,000 ounces in the fourth quarter to hit the midpoint of its 2.90 to 3.25 million ounce range, which is below its third quarter output. To reach the 205,000 tonne midpoint of its copper guidance, Barrick needs 50,000 tonnes in the fourth quarter, which matches its third quarter output.
Barrick Mining last traded at $57.20 on the TSX.
