Barrick Mining (TSX: ABX) beat the top end of its gold production forecast in the second quarter and posted sharply higher earnings, though a steep drawdown in free cash flow showed how much the company is spending to get there.
Revenue climbed 44% from a year earlier to $5.29 billion. Net earnings rose 50% to $1.22 billion, or $0.73 a share, while adjusted earnings reached $1.36 billion, or $0.82 a share, up 74%. Attributable adjusted EBITDA of $2.55 billion was 51% higher year on year, with a margin of 60%.
The comparison against the prior quarter is less flattering. Barrick earned $1.60 billion in the first quarter on revenue of $5.22 billion, meaning a modest revenue gain came alongside a meaningful drop in profit which was largely a function of pricing. The realized gold price of $4,417 an ounce was 8% below the $4,823 booked in the first quarter.
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Operating cash flow rose 28% to $1.70 billion. Attributable free cash flow, however, fell 33% year on year to $141 million, down from $1.21 billion in the first quarter.
Share buybacks meanwhile hit $1.21 billion in Q2. Total shareholder returns, including the quarterly dividend of $0.175 a share, reached $1.50 billion, a 242% increase.
Cash and equivalents ended the period at $5.93 billion, 17% lower than at the end of March. Total debt was little changed at $4.68 billion, leaving Barrick in a net cash position of $1.25 billion, down from $2.41 billion three months earlier.
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Gold production totalled 796,000 ounces, up 11% from the first quarter and above the guided range of 730,000 to 770,000 ounces. North America contributed 494,000 ounces and Africa and the Middle East 243,000. Copper output of 56,000 tonnes was down 5% from a year ago.
Gold cost of sales came in at $1,993 an ounce against $1,654 a year earlier, total cash costs rose 15% to $1,426, and all in sustaining costs increased 11% to $1,866 an ounce. Barrick pointed to higher fuel prices and lower processed grades. Copper all-in sustaining costs jumped 36% to $3.95 a pound.
Full year guidance was left intact at 2.90 million to 3.25 million ounces of gold at all in sustaining costs of $1,760 to $1,950 an ounce. Capital spending guidance was trimmed to a range of $3.8 billion to $4.2 billion from $4.0 billion to $4.45 billion, mostly on reduced outlays at Reko Diq.
Chief Executive Officer Mark Hill called it “our third quarter in a row with excellent operational and financial performance,” adding that the company “beat the top end of our gold production guidance and generated much higher earnings and cash flow than a year ago.”
Barrick also settled its long running friction with Newmont Corp., which agreed to an expanded Nevada Gold Mines and will pay a $1.95 billion top-up within 30 days. Newmont has consented to Barrick’s planned listing of its North American assets, which the company still expects to complete by year-end.
Barrick Mining last traded at $60.96 on the TSX.
