Barrick, Goldcorp announce big writedowns on gold, copper projects

Canadas two largest gold miners have taken massive writedowns on international properties after announcing deep losses in the latest quarter.

Late Wednesday, Barrick Gold took a $2.8 billion US after-tax impairment charge, related to its Lumwana copper minein Zambia and the Cerro Casale project in Chile.

Barrick also signalled it had put one of its Australian mines and a Papua New Guinea mine up for sale in an effort to pay down debt and build its cash holdings.

Canadas gold sector has been hurt by the lower average price of gold over the past year. Barrick said the average realized price for its product fell from $1,273 an ounce in 2013 to $1201 an ounce. Goldcorp said it realized an average of $1035.

Gold has followed other commodities lower, falling from a peak of $1798 an ounce in 2012 and above $1,900 an ounce in 2011. Copper prices have also declined 20 per cent in the last two years.

Mining companies have been selling off and writing down properties that are too expensive or too difficult to develop.

Goldcorp delayed further development of its Cerro Negro mine two years ago, citing high inflation in Argentina, difficulty in obtaining a power supply and a new resource tax.

Barrick suspended operations at the Lumwana copper mine in December, after Zambia raised the royalty rate on the country's open pit mining operations from six per cent to 20 per cent.

The Cerro Casale project in Chile was located in a remote area and fell victim to falling gold and copper prices.

Both gold miners reported declining revenues compared to a year earlier. Goldcorps quarter revenues were $1.1 billion, down from $1.2 billion in the year ago quarter.

Barrick revenues were $2.51 billion, down from $2.94 billion a year ago, as the company sold fewer ounces of gold. Barrick Gold Corp. chairman John Thornton promised a leaner and more focused company Thursday as he works to revive the fortunes of the troubled gold miner.

In2015, Barrick intendsto reduce its net debt by at least $3 billion in a move to "begin restoring our balance sheet to a position of strength."

It also intends to link the compensation of its35 top executives to their performance.

"Each year, these leaders will be graded on their collective performance, as measured against a transparent long-term scorecard disclosed to shareholders in advance," it said in a news release.