Barrick Gold no longer selling assets to pay down debt in shift in strategy

TORONTO _ Barrick Gold Corp. no longer plans to sell assets to reduce its debt, marking a shift in strategy for the Toronto-based miner.

Barrick chief financial officer Catherine Raw said the company has made significant progress and plans to instead use cash flow from operations and cash on hand to reduce its debt from US$6.4 billion to US$5 billion by the end of the year.

“Given how materially we have strengthened our balance sheets, we now do not intend to sell further assets for the purposes of debt repayment,” she told analysts on a conference call discussing its latest earnings results on Tuesday.

“Proceeds from any additional portfolio optimization will be reinvested back into the business to enhance our project pipeline or returned back to shareholders.”

The gold miner had for several years been selling assets to reduce its hefty debt. The change in tactic was announced as it reported first-quarter earnings, which beat analyst expectations.

The latest earnings report was the first issued by Barrick since the death of founder Peter Munk on March 28.

The miner, which keeps its books in U.S. dollars, said its first-quarter net income fell to US$158 million of 14 cents per share compared with $679 million or 58 cents per share in the year-earlier period.

Barrick said the drop was mainly related to a net impairment reversal of $1.13 billion recorded in the year-ago quarter related to the sale of 25 per cent of the Cerro Casale project. On an adjusted basis, earnings were 15 cents per share, slightly better than the 13 cents per share analysts had expected.

The miner also said it was suspending work on the pre-feasibility study on its Pascua-Lama project because it does not meet its investment criteria. But company president Kelvin Dushnisky told analysts on Tuesday it would be open to partnerships.

Dushnisky also told analysts Barrick is having “constructive” talks with the Tanzanian government _ which imposed export restrictions on gold and copper _ and it continues to work towards having a detailed proposal ready for its subsidiary Acacia Mining to review during the first half of this year.

London-based miner Acacia, of which Barrick owns 64 per cent, saw a 45 per cent drop in gold production in its Tanzanian operations last quarter as it grappled with export restrictions.

Acacia said the drop in production resulted from reduced operations at its Bulyanhulu mine and producing mostly from lower-grade stockpiles at its Buzwagi mine.

Under the proposed framework agreement, economic benefits generated by Acacia’s operations would be split with the Government of Tanzania on a 50/50 basis, Barrick said.