African Barrick Gold shares hit by $727m charge and lawsuit
African Barrick Gold (LON:ABG), Tanzania's largest gold miner, took a $727 million post-tax charge from reducing the value the majority of its mines, as part of the gloomy results for the first half of 2013, logged Tuesday.
The impairment followed an operating review that also drove the company to announce $95 million of operating cost cuts, on top of reductions in capital and exploration spending that it revealed in May.
Greg Hawkins, African Barrick CEO, said the company is also shortening the expected lifespan of its Buzwagi mine, its highest-cost operation, down from 10 to six and a half years, with mining ceasing in three and a half years’ time.
“Having taken these steps, we remain confident in the ability of our asset base to deliver shareholder value,” he said in a press release.
The miner, which employs about 5,600 workers and 3,500 contractors, has been struck by high costs and production delays that have resulted in three consecutive years of output decline since its shares were listed in 2010.
African Barrick is facing a lawsuit over deaths in 2011, as Tanzanian villagers claim the company was complicit in the killing of six locals by police.
The mid-cap gold miner, which said it believes these "proceedings are without merit" and that it "intends to vigorously defend its interests," saw gold investors heading for the exit even though it set out plans to address its financial problems. The miner’s stock was down 5.4p to 111.4p this morning.