http://www.morningstar.com/earnings/28651192-barrick-gold-corp-abx-q2-2011.aspx

Barrick Gold Corp ABX
Q2 2011 Earnings Call Transcript

Transcript Call Date 07/28/2011

Operator: Ladies and gentlemen, thank you for standing by and welcome to the Barrick Gold Q2 2011 Results Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. As a reminder, this conference is being recorded, Thursday, July 28, 2011.

I would now like to turn the conference over to Mr. Deni Nicoski, Vice President of Investor Relations. You may go read, sir.

Deni Nicoski - VP, IR: Thank you, operator, and good morning, everyone. Before we begin, I will bring to your attention the fact that we will be making forward-looking statements during the course of this presentation. For a complete discussion of the risks, uncertainties, and factors which may lead to our actual financial results and performance being different from the estimates contained in our forward-looking statement, please refer to our year-end report or our much recent AIF filing.

With that, I'll hand it over to Aaron Regent, President and CEO of Barrick.

Aaron Regent - President and CEO: Thanks Deni and good morning and thank you for joining our second quarter conference call. I'm joined here today by Jamie Sokalsky, Peter Kinver, Kelvin Dushnisky and Rob Krcmarov and there are also other members of our senior management team on hand as well who will be available to answer questions later on in the call.

I'll start by covering some of the highlights of the quarter and provide an update on our projects, then I'll turn the call over to Rob Krcmarov, our Senior Vice President of Global Exploration to discuss the exploration upside at the recently acquired Lumwana and Jabal Sayid assets and then Jamie will take you through our results in a bit more detail and our outlook on the gold and copper market after which we will be happy to take any questions that you might have.

Turning to the quarter, operationally and financially, we had a solid quarter, but the increased pressure on the capital costs of our project has been a challenge. Metal prices continued to increase underpinned by strong price support of fundamentals. Operationally, we met our production and cost targets. Second quarter gold production was 1.98 million ounces at a cash costs of $445 per ounce, and we remain on track to meet our guidance this year.

With the increase in metal prices and good cost control, our margins continue to expand and led to record adjusted net earnings of $1.1 billion or $1.12 per share, which is above consensus estimates. This also equates to an annualize 21% return on equity.

We completed the Equinox acquisition and the associated long-term financing. The newly acquired assets will add another source of long-term cash flow to the Company. The one area where we continue to be challenged is the pressure on the capital cost of our projects. I'll elaborate more in a moment, but it is worth emphasizing that despite the higher capital costs, the returns have also increased due to the leverage these projects have to higher metal prices.

Looking more closely at our operating performance, the North American region continued to perform ahead of expectations, producing around 923,000 ounces in the quarter at a total cash costs of $404 per ounce, primarily due to strong performances from Cortez and Goldstrike. Cortez production of 419,000 ounces at a total cash costs of $220 per ounce reflects a ramp-up of leach pad production, increased mill throughput from debottlenecking and the processing of refractory ore at Goldstrike's facilities.

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