Barrick flags $2bn in cost cuts, earmarks Plutonic for divestment

The world’s largest gold producer, Barrick Gold has revealed just how much it expects to cut from the company.

In a presentation to the Denver Gold Forum on Tuesday, Barrick said it will cut $2 billion from its capex and costs across the organisation, reiterating it will be implementing budget discipline, focussing on investor returns, and is planning further portfolio optimisation.

The miner said implementing an increasingly disciplined capital allocation framework will allow the company to react quicker in a lower gold price environment.

“Returns will drive production; production will not drive returns,” Barrick said.

Barrick has already shelved a number of high cost projects, deferred about $4 billion in capital spend, divested three high cost mines, and cut jobs across its operations.

But the slashing isn’t over yet.

Barrick said it is reducing its 2013 guidance for all-in cash costs by a full $100 per ounce and that 75 per cent of this year's production will be mined at less than $800 an ounce.

It noted new life of mine plans will be based on a gold price of $1,100 an ounce as the miner adjusts to lower commodity prices.

Ten Barrick mines have cash costs over the magic $800 an ounce mark including its Plutonic mine in Western Australia which it said could be divested.

Barrick said it will be focussing its efforts on five core mines, including Cortez and Goldstrike in Nevada, Veladero in Argentina, Lagunas Norte in Peru and Pueblo Viejo in the Dominican Republic.

The operations, all located in the Americas, generate 60 per cent of the company’s gold output at a cash cost of $700 an ounce.

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