Bloomberg News

Barrick Profit Trails Estimates, Production May Fall in 2012

February 17, 2012

(Updates with closing share price in seventh paragraph.)

Feb. 16 (Bloomberg) -- Barrick Gold Corp., the world’s largest producer of the metal, reported fourth-quarter profit that trailed analysts’ estimates and said gold production may decline this year.

Net income dropped 0.2 percent to $959 million, or 96 cents a share, from $961 million, or 96 cents, a year earlier, Toronto-based Barrick said today in a statement. Profit excluding impairment charges related to redundant power assets and other one-time items was $1.17 a share, less than the $1.26 average of 15 estimates compiled by Bloomberg. Sales climbed 26 percent to $3.79 billion from $3.01 billion.

The company forecast 2012 gold production of 7.3 million to 7.8 million ounces, compared with 7.68 million last year. Copper production will rise to 550 million to 600 million pounds, from 451 million in 2011, Barrick said.

The company’s so-called total cash costs per ounce of gold rose 15 percent to $505 on production of 1.81 million ounces in the quarter. Total costs for copper rose 84 percent to $1.99 per pound on output of 143 million pounds.

“Production was a little shy, realized prices maybe a little lower than we would have expected and the cash costs were a little higher than we would have thought for the copper side,” John Stephenson, who helps manage $2.7 billion of assets at First Asset Investment Management Inc. in Toronto, said today in a telephone interview.

Prices Rise

Gold, which has gained for 11 straight years, averaged $1,687 an ounce in the quarter in New York, 23 percent more than a year earlier. Barrick realized an average sale price of $1,664 an ounce of gold and $3.69 per pound of copper.

Barrick rose 1 percent to close at C$48 in Toronto. The shares have gained 4.2 percent this year.

Barrick is among gold producers facing higher labor, equipment and raw-material costs. The industry’s average cash production cost rose 28 percent to $596 per ounce of gold in the third quarter of 2011 from a year earlier, according to data compiled by Bloomberg Industries.

Barrick said its Pueblo Viejo project in the Dominican Republic is on schedule to start in the middle of this year. The $5 billion Pascua Lama mine, on the border of Chile and Argentina, will begin production in mid-2013, the company said.

Goldcorp Inc., the second-largest producer by market value, said yesterday its fourth-quarter gold costs increased 59 percent to $261 an ounce, after accounting for revenue from other metals.

--Editors: Steven Frank, Tina Davis

To contact the reporter on this story: Liezel Hill in Toronto at lhill30@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net


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