Barrick’s Cortez mine
Barrick Gold Corporation’s (ABX) Cortez properties include the Cortez open-pit mine and the Cortez Hills underground mine. The Cortez mine is located 100 kilometers southwest of Elko, Nevada, in Lander County. The Cortez mine is one of the largest and lowest-cost mines in the world, with huge upside exploration potential. It is Barrick’s largest-producing mine and contributes close to 15% of the total production.
To learn more about open and underground mining, read Market Realist’s The ins and outs of gold mining for companies like Barrick Gold.
Tons mined is material mined, including waste and overburden. After stripping overburden from total tons mined, ore is received, which is in turn processed.
The Cortez mine produced 273,000 ounces at all-in sustaining cost (or AISC) of $589 per ounce in the third quarter of 2014. This is lower than the production of 333,000 ounces in 3Q13. This is mainly due to the mining of lower-than-expected ore grades. Segment income also decreased by 45% year-over-year for 3Q14 due to lower sales volume and lower gold price realizations.
Barrick Gold is also going through a prefeasibility study on the lower zone at Cortez to evaluate the prospects of deeper mining below the currently permitted level. Studies will complete in 2015. Successful studies could benefit share prices and the company’s future outlook.
Production guidance lowered
Production for 2014 is expected to be between 880,000 and 920,000 ounces. This is below the previous guidance of 925,000 to 975,000 ounces. This is due primarily to negative grade reconciliations that impacted production in the first half of 2014. In 2015, production is expected to be below 1 million ounces as the company has resequenced its ore processing schedule to facilitate the commissioning and ramp-up of the thiosulfate technology project at Goldstrike.
AISC guidance remains at the high end of the $750- to $780-per-ounce range. This, however, is quite low compared to Barrick’s peers, including Kinross Gold Corporation (KGC), Newmont Mining Corp (NEM), and Goldcorp Inc. (GG) with production costs in the range of $900 to $1,200 per ounce.
Investors can also consider investing in gold-backed exchange-traded funds (or ETFs) such as Standard and Poors depositary receipt (or SPDR) Gold Shares (GLD) and ETFs investing in senior and intermediate gold names such as VanEck Vectors Gold Miners Index (GDX).