African Barrick warns output will sink again

SHARES in gold miner African Barrick Gold sank yesterday as it posted disappointing results for the full year, and forecast lower production for the fourth year in a row.

The FTSE 250 gold miner said it expects production to sink for the fourth consecutive year in 2013, to between 540,000 and 600,000 ounces of the yellow metal.

Last year, output came in at 626,000 ounces of gold, down from 688,000 ounces over 2011, primarily due to the winding down of an old mine.

African Barrick Gold, which has four producing mines in Tanzania, said earnings before interest, tax, depreciation and amortisation for the full year were $331m (£213m), down almost 40 per cent from 2011 and below forecasts.

The crash was a result of lower production – hit by a strike at its flagship Bulyanhulu mine and illegal mining at North Mara – but also cash costs, which soared 37 per cent from their 2011 level to $949 per ounce.

Following the collapse of takeover talks between ABG parent Barrick Gold and a national Chinese gold company in January, the Tanzania-focused company kicked off an operational review, with emphasis on cost cutting, which chief executive Greg Hawkins told City A.M. was a “strong focus” for this year.

Hawkins added that investors should “stick with” the company as it rides through a difficult period.

Analysts from Canaccord Genuity said that the production target is “substantially below our estimate”, while Cailey Barker at Numis said investors should avoid the company, adding it is “another disappointing result from a serial disappointer”.