Barrick takes $2.8-billion writedown, vows to slash debt this year

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Barrick Gold Corp. slashed jobs and hung the for sale sign on some of its Asia-Pacific assets, as the Canadian company vowed to reduce its debt by at least $3-billion (U.S.) this year.

The miner also took a $2.8-billion impairment charge on its mines, most of which stemmed from its troubled Lumwana copper mine in Zambia.

The Lumwana loss erases the little remaining value associated with Barrick's acquisition of copper company Equinox, a purchase that was made at the top of the cycle and has contributed to the miner's $13-billion debt burden.

Barrick said it would start by selling one of its Australian mines and a Papua New Guinea mine to pay down its debt. As well, the company announced that it had cut jobs at its Toronto headquarters by nearly 50 per cent to 140 people this year, which would help reduce expenses. The layoffs were first reported by the Globe and Mail in January.

The company called its actions a "back to the future" move, or back to a time when Barrick had the coveted top investment grade rating and "prudent financial management was a bedrock principle."

"Our current level of debt is inconsistent with that principle," Barrick said in a statement announcing its year end results. "As we return to our original values, no priority is more important than restoring a strong balance sheet."

Since bullion started plummeting in 2011, most of the gold industry has had to cut jobs and sell assets to stay afloat. Barrick has taken some of the most dramatic actions, shrinking its production, overhauling its board and mothballing its Pascua Lama project in the Andes.

The Lumwana writedown along with charges on some of Barrick's other mines brings the total amount of writedowns for last year to $3.4-billion and adds to the $11.5-billion in charges incurred in 2013.

That led Barrick to report a loss of $2.9-billion in 2014 compared with a loss of $10.4-billion in the previous year.

The company said on Wednesday that it expects its portfolio to deliver a 10-to-15 per cent return on invested capital through the metal price cycle. "We will defer, cancel or sell projects that cannot achieve this target," Barrick said in a statement.

Under the miner's new chairman John Thornton, the management structure has been revamped and nearly every executive has been replaced.

The company noted that its hefty debt has underpinned its low stock price. Over the year, Barrick's stock is down 30 per cent to $15.21 (Canadian) per share.