Rising stars among gold producers, while largest face declining output

Thursday, March 08, 2018 2:45 PM ET

By Carrie MacDonald and Christopher Galbraith

As chronicled in the recently published Mined Supply Report for the fourth quarter of 2017, global gold production was up in the December 2017 quarter compared with the year-ago quarter; however, the largest producers did not drive that increase. Several of the top 10 gold miners had lower production than in the fourth quarter of 2016, ranging from a decline of 1% by Newcrest Mining Ltd. to a 15% drop by Goldcorp Inc. However, both companies had higher production in the fourth quarter of 2017 than in the third quarter (see table), which suggests that their lower 2017 production was the result of factors present earlier in the year.

Newcrest's incremental decrease from the fourth quarter of 2016 was largely due to falling production at Lihir, although lower grades at Gosowong also contributed to the decline. Newcrest attributed some of Lihir's lower production to unplanned maintenance, which accounts for lower throughput, but gold grades at Lihir were also down over the year-ago period. On the other hand, the company's Australian production was up as Telfer processed more ore at higher grades and Cadia East ramped up from a shutdown earlier in 2017 to achieve its highest production in five quarters.

Goldcorp was the world's fifth-largest producer in the quarter. Complete mine-level production figures are not yet available, but lower annual production was in the company's own forecasts. Goldcorp had issued an earlier guidance of 2.5 million ounces in 2017 and beat that estimate with almost 2.6 Moz produced.

Newmont Mining Corp. topped Barrick Gold Corp. as the December 2017 quarter's largest producer, although both mining giants had lower production than in the fourth quarter of 2016, with Newmont down 2% and Barrick down 10% year over year. Complete mine-level production figures are not yet available for Newmont's operations, but a fourth-quarter 2017 results update in February cited lower grades at Twin Creeks part of its Nevada Operations; Yanacocha; and Tanami, with weather conditions impacting the latter two mines.

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Several factors lowered Barrick's attributable production in the fourth quarter of 2017. Production at Lagunas Norte and Porgera was up over the fourth quarter of 2016, but at the namesake Barrick Nevada operation, production fell by about 77,000 ounces. Production was down another 12,000 ounces at Pueblo Viejo, of which 7,200 ounces was attributable to Barrick, and was another 10,000 ounces lower at Hemlo. These declines, coupled with the production loss from Barrick's June 2017 divestiture of a 50% interest in Veladero, resulted in a more than 135,000-ounce fall in Barrick's fourth-quarter 2017 production compared with the year-ago quarter.

The world's perennially third-largest gold producer, AngloGold Ashanti Ltd., was one of the few in the top 10 to increase production in the December 2017 quarter. With output of just over 1 Moz, the South African miner had its best quarter since the fourth quarter of 2014. The company managed to eke out that production at an all-in sustaining cost 6% lower in South African rand than in the same period the year before. In U.S. dollars, the all-in sustaining cost was 4% lower. Production was down slightly at AngloGold's 45%-owned Kibali (Randgold Resources Ltd. 45%, Société Minière de Kilo Moto SARL 10%) and Mponeng, but was stable to incrementally higher everywhere else. Greater increases at Siguiri, Geita and Tropicana contributed to a 3%, or 27,000-ounce, overall increase in quarterly production compared with the year-ago period.

Freeport-McMoRan Inc. enjoyed a 32% year-over-year gold production increase in the December quarter, as Grasberg is currently processing more gold-rich ore. The operation was ranked the world's third-largest gold producer in 2017, behind Muruntau and the Barrick Nevada operation.

One of the greatest standouts was B2Gold Corp., which increased production by 105,125 ounces over the third quarter of 2017 (+78%) and 100,102 ounces over the fourth quarter of 2016 (+71%). B2Gold owes the significant increase to its Fekola mine, which achieved commercial production in December 2017. Fekola has pushed B2Gold's annual gold production higher, with 2017 output up 15% over 2016, and the company forecasts 2018 consolidated gold production to be as much as 910,000 to 950,000 ounces, a 45% to 50% increase over 2017.

Although not ramping up as much as B2Gold, three other midtier producers are also in growth mode. Kirkland Lake Gold Ltd., OceanaGold Corp. and New Gold Inc. had fourth-quarter 2017 gold production increases between 56% and 62% over the year-ago quarter. Kirkland Lake completed its first year after acquiring Newmarket Gold in 2016, and OceanaGold commissioned its Haile mine earlier in 2017. New Gold increased its production by 72,503 ounces over the third quarter of 2017, after commissioning its Rainy River mine in September 2017.

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