Goldstrike’s growing output boosts Barrick’s earnings

American Barrick Resources (TSE), the power house of the North American gold mining industry, continues to build on its own success. The Toronto-based company reported record first-quarter earnings of US$15.6 million or 11 cents per share compared with US$13.1 million or 10 cents a share in the equivalent period last year. First-quarter production at six mines climbed to 171,980 oz. from 131,111 oz. in the comparable period in 1990 thanks largely to production increases at the Goldstrike operation in Nevada. Goldstrike contributed 110,240 oz. in the quarter to the company’s total output, up from 70,123 oz. a year ago.

While revenues also climbed to US$73 million in the quarter from US$52.9 million in 1990, chief financial officer Gregory Wilkins told shareholders at the company’s recent annual meeting that earnings will be flat this year.

The prediction is based on the expectation that 1991 will be something of a transition year for Barrick. As a result, Wilkins said he doesn’t anticipate a big increase in yearly earnings until 1992, when work crews begin mining higher-grade ore at Goldstrike and Barrick reaches its short-term goal of 1.1 million oz. annually.

The bedrock on which Chairman Peter Munk is mapping out the company’s future growth, Goldstrike is slated to produce 400,000 oz. this year.

Meanwhile, President Robert Smith said he expects mining operations to cease at the Camflo mine in Quebec by 1992 unless new ore is found in the region. Production at Camflo increased to 6,493 oz. in the first three months of 1991 from 5,457 oz. in the first quarter of 1990. However, Smith said the Camflo plant could continue to operate as a custom milling facility when mining stops.

At about the same time as Camflo is wound down, Barrick will begin extracting ore from the new Mattawasaga zone, east of its Holt-McDermott gold mine at Kirkland Lake, Ont. Work crews are extending the Holt-McDermott shaft to a depth of 2,034 ft. The Mattawasaga zone, containing two million tons of grade 0.18 oz., will be reached via a drift on the 1,150-ft. level.

As production at Holt-McDermott was about 10,000 oz. below target last year due to lower than expected head grades, the Mattawasaga discovery is regarded as something of a savior to the mine. Without it, analysts say Barrick may have been tempted to sell the operation to Noranda (TSE), which is known to want it for use as a processing facility for the Freewest Resources (TSE) gold discovery nearby.

In other news, Barrick lawyers continue to work behind the scenes to limit the scope of the lawsuit launched by U.S. exploration company Gold Standard (NASDAQ) over the Mercur mine in Utah. Last February, Barrick filed a motion for summary judgment in a Utah district court on all the remaining claims brought about by Gold Standard against Barrick and co-defendants Getty Oil and Texaco Inc.

In an interview with The Northern Miner, Wilkins said he hopes the judge will make a ruling by the end of this year, thus paving the way for the actual jury trial to begin sometime in 1992.

By the end of 1991, Barrick will have spent $5 million on its defence. But Wilkins said the expenditure has been worthwhile. “The mining business is fraught with people who come out of the woodwork and attempt to get something for nothing,” he said.