Barrick Gold Undershoots Expectations

November 2, 2012 at 07:59

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Barrick Gold, the largest miner of the yellow metal by market value, disappointed investors on Thursday by undershooting expectations on third-quarter earnings.

Analysts had previously been expecting a combination of moderating production rates, softening gold prices and higher production costs to trim adjusted earnings from $1.38bn to about $1bn for the quarter to September.

However, Barrick delivered adjusted net earnings of $849m for the quarter while $231m of impairments booked on soured investments in Papua New Guinea and losses on financial instruments dragged reported net earnings down to $620m – less than half achieved a year ago.

Shares in the Toronto-listed group fell by C$3.43 ($3.44), or nearly 9 per cent, to C$36.96 on Thursday compared with a 52-week high of C$53.26 hit last November.

In spite of development problems at its Pascua-Lama project in the Andes, Barrick Gold said a revised annual gold production target of 7.3m-7.5m ounces remained within the lower end of the range of 7.3m-7.8m ounces previously predicted.

Jamie Sokalsky, president and chief executive, said Barrick was lifting guidance on the capital costs of Pascua-Lama from $8bn to $8.5bn, though he insisted that that project would emerge as “one of the world’s largest, lowest cost mines”.

Barrick edged up guidance on the average cash cost of producing an ounce of the precious metal for the current year from $550-$575 to $575-$585.

Group revenues dropped from $3.91bn to $3.43bn.