Hemlo dodges Barrick cuts – by Carl Clutchey (Thunder Bay Chronicle-Journal – June 25, 2013)

Thunder Bay Chronicle-Journal is the daily newspaper of Northwestern Ontario.

Barrick Gold’s flagship Hemlo mining operation won’t be negatively affected by major job cuts that the company announced on Monday. But locals are worried that the operation will be hurt if the price of gold continues to lose its shine.

“The job reductions announced (Monday) do not impact the Hemlo mine,” Barrick spokesman Andy Lloyd said in an email.
Barrick is laying off about 100 corporate staff, mostly from its Toronto headquarters, as it struggles with falling gold prices and various internal challenges.

Barrick employs about 700 full-time workers and contract employees at its Williams and David Bell gold mines about 40 kilometres east of Marathon. The jobs that are being cut represent about 30 per cent of the total corporate office positions for the Toronto-based mining company, which is the world’s largest gold producer.

Most of jobs are at Barrick’s head office in Toronto, but some are at its regional offices. An email to The Canadian Press from Barrick says staff at a Barrick office in Salt Lake City, Utah, may also be affected.

The company advised staff last week that the layoffs were coming. The cuts affect a small portion of the 25,000 employees that Barrick has worldwide, but represent its ongoing efforts to streamline during a period of falling gold prices and internal challenges, including mounting costs at its Pascua-Lama project in South America and losses at its copper business in Africa.

Marathon Mayor Rick Dumas said the town is watching the situation closely as the price of gold continues to slide.
“Let’s face it, Hemlo is the No. 1 employer in our (North Shore) region,” said Dumas. “The company has told us that the key to the whole operation is the price of gold.

“Hopefully, Barrick will continue to keep us informed.”

Though the gold price has dropped below US$1,300 per ounce, it remains above the amount the Hemlo operation needs to make a profit.

According to Barrick’s website, Hemlo produced 206,000 ounces of gold last year at a total cash cost of $978 per ounce.
As of Dec. 31, “Hemlo’s proven and probable mineral reserves were 1.2 million ounces of gold,” the company said.

Barrick also said Monday that its capital spending this year would be reduced by about half a billion dollars to between $5.2 billion and $5.7 billion — down from the previous budget of $5.7 billion to $6.3 billion.

Barrick has reduced exploration spending to a range of between $300 million and $340 million, which is $100 million lower than before.

This spring, Hemlo management announced approval to proceed with a feasibility study to examine the possibility of expanding the operation’s open pit.

Asked about that project Monday, Lloyd said: “The evaluation of an open pit expansion is still underway.”

The company vowed to make changes in the way it does business after a massive writedown primarily related to its copper mine in Zambia pushed the miner to a loss of US$3.06 billion in the fourth quarter of 2012.

As well, African Barrick Gold suffered a net loss of just under US$46 million during the fourth quarter as a major increase in its cost of sales more than offset slightly higher revenues.

Barrick holds a 73.9 per cent interest in the company, which was formed when the Canadian gold miner spun off its African operations in March 2010.

In January, talks aimed at the potential sale of African Barrick Gold to a Chinese company, called CNG, ended without a deal.

In South America, the company is coping with a setback at its Pascua-Lama megaproject, which straddles the border between Chile and Argentina.

The project will be delayed past the second half of 2014, when the company had previously expected to get the megaproject into production, due to Chilean court- and government-ordered suspensions to deal with environmental impacts.

The company said the delay is expected to result in a higher price tag for the massive project, which is currently estimated to cost US$8.5 billion.

— With The Canadian Press

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