Barrick Gold Posts $2.8 Billion Loss – by Judy McKinnon and Alistair MacDonald (Wall Street Journal – February 13, 2014)

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Takes Impairment Charge for Projects

Barrick Gold Corp. ABX.T +3.36% Thursday posted a fourth-quarter loss of $2.8 billion after taking another impairment charge for troubled projects such as its massive Pascua Lama operation and as it continued to grapple with lower gold prices.

The world’s largest gold miner as measured by both production and market capitalization also slashed its gold reserves 26%, guided for lower gold production in 2014 and cut its capital-spending plans by about 50%. “2013 was a tough year for Barrick by any measure,” Jamie Sokalsky, president and chief executive, said in a statement.

The company said its gold reserves at the end of 2013 fell to 104.1 million ounces from 140.2 million ounces a year earlier. It calculated its reserves for the year using a gold price assumption of $1,100 an ounce, it said, well below the $1,500 an ounce used in 2012.

“While this is well below the company’s outlook for the gold price and below current spot prices, it reflects Barrick’s focus on producing profitable ounces with a solid rate of return and the ability to generate free cash flow,” the company said.

Gold currently trades around $1,291 an ounce.

Barrick’s fourth-quarter loss of $2.83 billion, or $2.61 a share, included asset-impairment charges totaling $2.82 billion, mainly for its troubled Pascua-Lama project straddling the Chilean and Argentine border, as well as its Porgera project in Papua New Guinea, Veladero in Argentina and its Australia Pacific gold segment. The charge for Pascua-Lama totaled $896 million, which adds to the $5.1 billion charge Barrick took in early 2013 on the massive project, whose construction it suspended last October.

Adjusted to exclude the charges, Barrick earned $406 million, or 37 cents a share in the latest quarter. Analysts polled by Thomson Reuters were expecting a profit of 41 cents a share.

Revenue fell to $2.93 billion from $4.15 billion. Analysts were expecting $2.84 billion.

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