Barrick Gold Corp., the world’s largest producer of the metal, rose the most in six months after saying it is open to anything that boosts shareholder value and it has been approached by many buyers interested in its assets.
Barrick climbed 4.5 percent to C$33.16 at 11:13 a.m. in Toronto, after earlier advancing 5.2 percent, the most intraday since July 19.
“We continue to actively pursue opportunities to optimize our existing portfolio,” Barrick Chief Executive Officer Jamie Sokalsky said today on a conference call. “We’re open to anything that will increase shareholder value.”
Sokalsky, who took over as CEO in June after his predecessor Aaron Regent was fired, has previously said he’s reviewing assets in an effort to improve returns and cash flow as costs soar. The Toronto-based company is actively seeking to sell Barrick Energy Inc. and Kabanga, its 50 percent-owned nickel project.
“When I started talking about portfolio optimization, the phone actually started ringing off the wall a bit, with a lot of buyers,” Sokalsky said on the call. “And many of those buyers are serious buyers that are willing to look at paying a fair price for assets.”
The company today posted an unexpected fourth-quarter loss after taking a $3 billion writedown on a Zambian copper mine it bought in 2011.
The loss was $3.06 billion, or $3.06 a share, compared with net income of $959 million, or 96 cents, a year earlier, Barrick said in a statement. Earnings excluding the writedown and other one-time items were $1.11 a share, beating the $1.05 average of 22 estimates compiled by Bloomberg. Sales rose 11 percent to $4.19 billion.
The writedown “was twice as big as we expected,” Pawel Rajszel, an analyst at Veritas Investment Research in Toronto who has a buy rating on the stock, said by phone. “They definitely didn’t do their due diligence.”
Barrick is the latest major mining company to take multibillion impairment charges as it grapples with rising production costs. The gold producer said it now won’t proceed with an expansion at the Lumwana copper mine, acquired as part of its C$7.3 billion ($7.29 billion) takeover of Equinox Minerals Ltd., Barrick’s second-largest acquisition. It doesn’t plan to build any new mines in what is a “challenging environment” for such investments.
“When we bought Equinox, our view was that Lumwana was a very long-life mine, with exceptional resource potential,” Sokalsky said in the statement. “Unfortunately, our new mining plan projects mining costs to be higher than we anticipated.”
Other miners reporting charges include Kinross Gold Corp., Canada’s third-largest gold miner, which said yesterday it took a $3.09 billion writedown on its Tasiast mine in Mauritania. Kinross acquired the project when it bought Red Back Mining Inc. for about C$8 billion in 2010.
Rio Tinto Group, the world’s second-biggest miner, today reported its first full-year loss in at least 21 years after taking a $14 billion charge on the value of its coal and aluminum businesses.
Gold, which has risen for 12 straight years, averaged $1,719 an ounce in the fourth quarter on the Comex in New York, 1.9 percent more than a year earlier and 3.8 percent higher than in the previous three months.
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