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What Drove Barrick’s Strong Copper Performance in 3Q15?

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Nov. 9 2015, Updated 7:07 p.m. ET

Copper production

Barrick Gold’s (ABX) copper production for 3Q15 was 140 million pounds at a C1 cash cost of $1.53 per pound. While production was 7% higher year-over-year (or YoY), C1 cash costs were down by 16% YoY. In this article, we’ll analyze what led to this strong performance in copper by looking at Barrick’s key copper assets.

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Lumwana outperformed

The Lumwana mine produced 77 million pounds of copper at C1 cash costs of $1.59 per pound. Management has upgraded the production guidance to 260 million–280 million pounds from 250 million–270 million pounds. C1 cash cost guidance has also reduced from $1.90–$2.15 to $1.60–$1.85 per pound. Improved guidance reflects higher grades.

Strong performance at Zaldivar

Zaldivar also delivered strong operational performance in 3Q15, with production up 12% YoY to 63 million pounds and C1 cash costs lower by 19% YoY to $1.47 per pound.

Management continues to expect first shipments of copper-in concentrate from Jabal Sayid in early 2016. Once the mine reaches full production, average production in the first five years is expected to be 100 million pounds per year.

Other companies producing copper, including BHP Billiton (BHP) (BBL), Freeport-McMoRan (FCX), Teck Resources (TCK), and Southern Copper Corporation (SCCO), are taking steps to increase production in order to lower costs.

BHP Billiton makes up 5.0% of the SPDR S&P Natural Resources ETF (GNR). By comparison, Freeport-McMoRan (FCX) forms 3% of the SPDR S&P Metals and Mining ETF (XME). Barrick Gold (ABX) forms 6% of the VanEck Vectors Gold Miners ETF (GDX).

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