Barrick Misses Preliminary Gold Production Estimate, Management Unfazed By Risks In Key African Country

Zinger Key Points
  • Barrick missed Q1 gold production estimates, but management maintains the full-year guidance.
  • The company also faces geopolitical risks in Mali, where it runs one of the largest operating gold mines.

Barrick Gold Corporation GOLD, the world’s second-largest gold producer, reported preliminary gold production of 940,000 ounces for the first quarter of 2024. This figure fell short of analyst estimates and reflects a continuation of the company’s production challenges experienced in 2023.

At the moment, Barrick anticipates all-in-sustaining costs (AISC) to increase by 7%-9% compared to the previous quarter. However, the company expects gold production to rise throughout the year, with the Pueblo Viejo gold mine in the Dominican Republic expected to ramp up production from the second quarter onwards.

Preliminary copper production was lower than expected at 40,000 tonnes, primarily due to lower grades at Barrick’s Lumwana mine in Zambia. As a result, copper AISC is projected to rise by 14% to 16% from the previous quarter.

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Beyond production concerns, Barrick faces heightened geopolitical risks in Mali, where it operates one of the world’s largest gold mines, Loulo-Gounkoto. This complex comprises two distinct mining concessions and boasts substantial gold reserves. It produced 683,000 ounces of gold in 2023 and remains on track to meet its production targets for the current year.

Per Africa Report, the complex is now at risk of a potential seizure by the Malian military junta, which has aligned itself with Russia's Wagner Group. The junta, established through a 2021 coup, has been trying to strengthen state control over mining companies through industry audits and implementing a new mining code.

Barrick maintains that its operations in Mali are governed by the existing 1991 mining code, not the junta's recently implemented code. CEO Mark Bristow has visited Mali twice since January as part of an extensive review of African operations. He noted that almost $10 billion of the company's contributions to Mali's economy, constituting between 5 and 10 percent of the country's GDP, are governed by the existing 1991 mining code.

Barrick is not alone in facing uncertainty within the Malian mining sector. Other major mining companies with a presence in the country include IAMGold Corporation IAG, B2Gold Corporation BTO, and Hummingbird Resources HUMRF. The junta’s actions raise concerns about the future stability of the mining industry, particularly given the involvement of a Russian paramilitary organization. 

The company will release its full first-quarter report on May 1, which may provide further insights.

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Also read: US, UK Clamp Down On Russian Metals Trade Due To ‘Its Brutal War Against Ukraine’

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