Canada’s Barrick Gold (NYSE:ABX)(TSX:ABX) suffered a huge loss for the fourth quarter, triggered by soaring costs at its Lumwana copper mine in Zambia, which it acquired two years ago when prices for the red metal were sky-high.
Copper prices have tumbled around 25% since the purchase and the gold giant’s shares are trading at their lowest point since the global financial crisis.
Barrick lost over $3 billion in the last quarter of 2012, or $3.06 a share, unveiling a hefty $4.2 billion impairment charge which reflected, said the company, that operating and sustaining capital costs were higher than anticipated at Lumwana.
Barrick’s writedown comes less than 24 hours after Kinross Gold Corp. (NYSE:KGC) announced a massive charge on its African operations.
“The message is clear: the industry must chart a new path forward. Barrick highlighted the need for change last year, and we are increasingly taking strong action and re-focusing our business based on the principle that returns will drive production, production will not drive returns,” said Barrick’s CEO Jamie Sokalsky.
The executive took over as the miner’s head officer in June last year after his predecessor was sacked due to investor discontent about the staggering stock price.
“Investors are rightfully demanding fundamental change in the gold industry, and Barrick is driving this new paradigm,” Sokalsky said.
He also announced that Barrick's chief operating officer, Igor Gonzales, will retire this year but will stay until his successor is appointed.
Gonzales joined Barrick in 1998 and has played a key role in the growth of Barrick's South America business unit.