Barrick Gold Corp. (TSX:ABX), the world's largest producer of the precious metal, reported higher-than-expected operating costs and a massive capital cost over-runs on Thursday in its first quarterly report since letting go CEO Aaron Regent in June.
The Canadian gold giant not only delivered unsatisfactory second-quarter results, but also lowered its long-term production forecast, marking a tough debut for the new CEO Jamie Sokalsky.
For the quarter, Barrick reported earnings of $780 million, or 78 cents a share, below the average anticipated by analysts of 95 cents.
Net income fell 35% to $750 million, or 75 cents a share, from $1.16 billion, or $1.16, a year earlier. Revenues, in turn, tumbled to $3.28 billion from $3.42 billion.
The gold miner raised cost guidance for the year to between $555 to $575 an ounce, up from the prior level of $520 to $560 an ounce.
Pascua Lama on hold
Barrick also announced it would delay the start-up of its Pascua-Lama mine, straddling the border between Chile and Argentina, for about a year, since a review of the company’s development projects showed the South American mine costs would jump as much as 60%.
“Based on information gathered to date, it is apparent that the challenges of building a project of this scale and complexity were greater than we anticipated,” said Sokalsky.
The company also slashed its copper production outlook because of weaker-than-expected output from the Lumwana mine in Zambia.
The Toronto-based gold producer said it would continue reviewing its mines and projects to determine which ones offer enough return on the investment.
In May, Barrick increased its dividend by 33%, in a move that was welcome by investors, who have been calling for a bigger piece of the pie for years. The miner thought the decision would help push up share prices that have underperformed increases in the gold price over the last decade.
More on Barrick's full report >> >>