The world's biggest gold producer isn't shying away from the realities of the gold market: Barrick CEO Jamie Sokalsky said on Thursday that his company will re-calculate its bullion reserves based on a gold price of $1,100, Reuters reported.
This is down from $1,500 at the beginning of 2013. The move – which could result in writedowns – will make some of Barrick Gold's assets uneconomical to mine. Sokalsky called it a "conservative approach."
Although the gold price dipped 28% in 2013, analysts had expected most miners to base their reserves on a $1,200 price.
The company will announce its new reserve estimate on February 13. Based on a $1,500 gold price, Barrick's gold reserves were 140.2 million ounces.
“We are only going to produce ounces that earn a higher return, that generate cash flow, that meet return hurdles," the CEO said, as reported by Bloomberg.
Analyst forecasts for the precious metal vary widely: Thomson Reuters GFMS's survey released on Thursday predicted an average price comfortably above that level. Germany's Commerzbank is predicting $1,400 an ounce. Meanwhile, HSBC recently reduced its target from $1,435 to $1,292. Barclays' target is $1,205.
Sokalsky also said that the miner will record a further impairment charge at its suspended $8.5 billion Pascua Lama project in the Andes.
As the gold price gained on Thursday so did Barrick, rising by 2.7 on the New York exchange to trade at $19.31.
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