Some interesting facts about Barrick that are current, and not filled with all the BS from the anti-gold hedger community.
Source is financial statements, NR's and an interview with Oliphant,...
Half of Barrick's production this year will be hedged as opposed to 100% of last years production.
18 million oz of Barricks gold reserves are hedged right now, leaving 80% of the 82.3 million oz of reserves unhedged. That's reserves, not resources. Accounting for resources could double the oz numbers.
Barrick has no net debt on their balance sheet. So the amortization of mine costs could be considered irrelevant. Therefore one could consider the cash costs to be the relevant number to use in assessing future profitability, adding a small amount for reclamation and interest payments (interest payments are no longer being capitalized going forward either, so should show up in cash costs unless new mines are developed) for Barrick.
Barricks average overall cash costs (end of 2001) are US$171 per oz (including reclamation). Considering they have no net debt, therefore mine cost amortization is simply an accounting entry (the mines are already paid for), cash cost is the relevant number we should use to determine Barricks profitability in the future.
Barrick cannot be hurt by a spike up in gold prices. They will not lose money as they are not margined. They will gain greatly along with the other gold companies by constructing additional mines, proving up additional reserves on existing properties, hedging less production, and delivering portions of production to their hedges if warranted by a large and sustained spike in gold. If gold prices stay the same or go down, Barrick will exceed other producers comparative numbers through low cash costs and higher revenue per ounce, thanks to the hedges.
Perhaps the big question is not why Barrick hedged the way they did for the last decade,...but why the other producers were so stupid that they didn't. Barrick made billions of extra dollars and funded may new very profitable mines through intelligent hedging.
Perhaps the others by slogging Barrick, are simply attempting to divert attention away from their incompetence and lack of foresite.
http://www.barrick.com/2_Press_Releases/
Revenue for 2001 reached $1,989 million
on gold sales of 6,278,000 ounces,
compared with $1,936 million on gold
sales of 5,794,000 ounces in 2000. The
higher revenues result from an 8 percent
increase in gold sales, partially offset by a
$17 per ounce or 5 percent decline in the
realized price. For the year, Barrick
realized a $70 per ounce premium over
the average spot price of $271 on the 61
percent of production delivered into the
Company’s Premium Gold Sales
Program, compared with a realized price
of $360 in 2000 and a premium of $84
on the 63 percent of production
delivered into the Program. The balance
of the ounces sold -- principally
Homestake’s production -- were sold at
an average price of $277 per ounce in
2001. Overall, the Company realized
$317 per ounce, $46 higher than the
average spot price for the year,
generating an additional $289 million in
revenue.
The number of spot deferred contracts in
the Company’s Premium Gold Sales
Program totaled 18.2 million ounces at
December 31. This represents
approximately 22 percent of reserves,
deliverable over the next 15 years at an
average minimum price of $345 per
ounce, with a minimum floor price of
$365 per ounce on 50 percent of
planned production in 2002. The
balance of 2002 production is expected
to be sold at spot gold prices.
OPERATIONS OVERVIEW
For the year 2001, the Company reported
total operating costs, including
reclamation, of $1,080 million, compared
with $950 million for the year prior. On
a per-ounce basis, total cash costs for the
year were $162, compared to $155 per
ounce for 2000. With the continued
weakness in gold prices, all of the
Company’s mines have focused on
reducing costs under their control across
all areas of their operation, including unit
mining, processing and administrative
costs per ton. At the same time, higher
power costs and lower grades at Goldstrike
and lower recovery rates during start-up
at Bulyanhulu have resulted in the higher
cash costs per ounce compared to the
prior year period. Barrick’s Other
Properties include seven mines in various
stages of closure. Two of the mines were
closed in 2001 (Homestake and Mount
Charlotte), with five scheduled to close in
2002 (El Indio, Bousquet, McLaughlin,
Ruby Hill and Agua de la Falda). |
