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viewBarrick Gold Corp.

Barrick to cut 100 jobs from Toronto HQ

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With its primary commodity taking a major kicking on the market, Barrick Gold Corp. (TSE:ABX) (NYSE:ABX) is to shed approximately 100 jobs as the gold giant’s Toronto head office looks set to shrink by about 30 per cent.

The downsizing comes less than a week after the cutting of 55 jobs in Nevada and Utah was announced, and the same month that dozens of staff were cut from the giant’s Australian operations.

Barrick, the world’s largest producer of gold, has been subject not just to the plummeting price of the metal and rising costs – based on today’s Comex trading, gold is down by 24 per cent for this year so far – but to company-specific issues as well.

This year has not been a good one for the gold giant, with the Toronto-based miner’s litany of disasters mainly clustered around its delay and overrun-plagued Pascua-Lama project.

The project, which straddles Chile’s border with Argentina high on the spine of the Andes at 4,500 metres above sea level, has long been the subject of concerns relating to its proximity to glaciers and to the effects of inadequate water safety on downstream communities.

Tensions over the issue came to a head in April when a local appeals court slapped a stop-work order on the site as the result of an injunction filed by indigenous communities, while an investigation was conducted which culminated in the ruling that the company had violated terms stipulated in the environmental approval it was granted for the site in 2006. The finding resulted in a headline-making fine of US$16 million, the maximum amount available under Chilean law, but perhaps even more significantly brought construction work on the site to a halt until the company has put in place the water-management systems previously agreed to, a feat set to push the mine’s date of first production back even further.

Even before those most recent events, the mine had been a focus of trouble, the site of massive cost overruns and other delays, including a February announcement of a $500 million cost increase, which brought the total estimated cost of the mine up to $8.5 billion. The various delays had pushed back the start date of operations more than half a year to late 2014 before the courts’ findings.

Although CEO Jamie Sokalsky hinted at the possibility of abandoning the troubled project altogether at the embattled gold giant’s annual shareholders’ meeting earlier in the year, the company signalled its commitment to the project by paying the fine levied by the Chilean court within 5 days, accruing a discount by so doing, thus paying the reduced rate of $11.6 million.

Once completed, Pascua-Lama is set, according to Barrick, to be one of the largest and lowest-cost gold mines in the world, expected to produce between 800,000 to 850,000 ounces of gold and 35 million ounces of silver in its first full five years of production.

Production costs are a constant bugbear for the company, which battles the high costs engendered by the decade long boom economy in gold. The company’s all in sustaining costs per ounce of gold were pegged at between $950 and $1050 per ounce at the time of the release of quarterly figures for the first three months of 2013 in April of this year.

Barrick was trading down on the TSX today, dipping as low as $16.56 per share in intraday trading from an open of $17.38, well below the company’s 52 week high of $42.08.

Quick facts: Barrick Gold Corp.

Price: 35.21 CAD

TSX:ABX
Market: TSX
Market Cap: $62.61 billion
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