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Barrick Gold reports $2.83 bln Q4 loss; slashes reserves to focus on returns

Barrick Gold (TSE:ABX) shares were higher on Thursday, even as the world's largest producer of the yellow metal posted a fourth quarter net loss of $2.83 billion, as it also cut its reserve estimates and said it anticipated lower production this year. 

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Barrick Gold (TSE:ABX) shares were higher on Thursday, even as the world's largest producer of the yellow metal posted a fourth quarter net loss of $2.83 billion, as it also cut its reserve estimates and said it anticipated lower production this year. 

The gold miner said the most recent quarter included some $2.82 billion in impairment charges, mainly tied to its Pascua-Lama, Porgera, Veladero and the Australia Pacific gold operations, as well as $176 million in suspension-related costs at the plagued Pascua-Lama project. 

On a per share basis, net loss amounted to $2.61 per share. 

Adjusted net earnings, excluding one-time costs, were $410 million, or 37 cents per share, compared to $1.16 billion, or $1.16 per share, in the same period a year earlier. 

Revenue fell to $2.93 billion from $4.15 billion.

The company, which has lately been focused on divesting assets as it strives to conserve cash in the face of a volatile gold market, also said Thursday that it expects to produce between 6.0 and 6.5 million ounces of gold in 2014, down considerably from nearly 7.2 million ounces produced in 2013. 

It also lowered its gold reserves estimate to 104.1 million ounces at the end of 2013, from 140.2 million ounces at the end of 2012, as it used a new gold price assumption of $1,100 per ounce of gold compared to the $1,500 an ounce price used in the prior estimate. 

"The disciplined capital allocation framework that we adopted in mid-2012 has been at the core of every decision we've made in the last year and half, and has put us in a much stronger position to deal with the challenging gold price environment our industry is facing today," said president and CEO Jamie Sokalsky. 

"Under a comprehensive plan to strengthen the company, we have become a leaner, more agile organization, better protected against further downside price risk and well positioned to take advantage of attractive investment opportunities going forward."

In the last six months, the company has announced a series of divestments, and suspended construction at its Pascua-Lama project temporarily in the fourth quarter. Through these efforts, it reduced 2013 capital and operating costs by about $2 billion, and improved near-term cash flow. 

Last month, Barrick and Goldcorp (TSE:G) announced a deal to sell the Marigold mine in Nevada to Silver Standard Resources Inc. (TSE:SSO) for a total of US$275 million cash, with Barrick to receive US$86 million for its stake in the mine. 

It also announced an agreement to sell Barrick Energy and six other non-core mines for total proceeds of $1.0 billion. This includes the sale in late January of its two mine operations in Western Australia to Northern Star Resources for AU$75 million in cash. This deal is expected to close in March.

The divestments come after a terrible year for the miner, with 2013 marking a period of write-downs, cost overruns and a shareholder rebellion over executive compensation, most notably co-chair John Thornton's multi-million dollar signing bonus amid a cratering gold market. 

Earlier in December, the gold giant announced a series of high level personnel changes, starting with news that founder and chair Peter Munk is to step down from the Toronto-headquartered miner’s board of directors at Barrick's next annual meeting of shareholders. Thornton, Munk’s co-chair since 2012, will attempt to fill the 86-year-old’s shoes, taking over the position of chairman effective as of the same meeting, likely to occur in late April.

"2013 was a tough year for Barrick by any measure, but with a renewed focus on capital discipline and operational excellence across the board, we have reset our focus and revitalized the company's prospects," Sokalsky said. 

Shares of Barrick rose nearly 3% in Toronto on Thursday, to C$21.43. So far this year, the stock has climbed over 14%. 

Quick facts: Barrick Gold Corp.

Price: 35.21 CAD

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