Barrick Gold (TSE:ABX) (NYSE:ABX), the world's biggest gold producer, said it expects to take charges of up to $3bn following an annual accounting impairment review. Shares fluctuated.
The Toronto, Ontario-based company said in a statement late Thursday that it may have to take a goodwill impairment charge of about $1.8bn, and asset impairment charges of $1.0-$1.2bn, based on its preliminary analysis.
The asset writedown is primarily attributed to its Pascua-Lama mining project, on the border of Chile and Argentina, and its Pueblo Viejo project in Dominican Republic.
Barrick also said it met its $3bn debt reduction target through non-core asset sales.
Barrick has been working hard to improve its balance sheet after gold prices slumped for three straight years.
Barrick said it will provide an update on the writedowns on February 17 when it reports detailed financial and operating results for the year ended December 31.
The write downs are non-cash items that reflect the reduced long-term value of the assets.
Shares were up 1.3% at C$12.05 at 1:25 p.m. in Toronto, after falling to as low as $11.46. The stock has lost 24% over the past year, but it is up 18% this month.
The company lowered its gold price assumption to $1,000 an ounce for 2016 and to $1,200 long term.
“In line with our objective of generating positive returns in virtually any foreseeable gold price environment, we have decided to use pricing for our impairment testing that is prudent in current market conditions,” Barrick President Kelvin Dushnisky said in the statement.
Barrick also said its preliminary 2015 production was 6.12mln ounces of gold, in line with the company’s latest guidance of 6 million to 6.15mln ounces.