Barrick hit by bleak outlook
African Barrick Gold posted a 30 per cent increase in core profit for 2011 yesterday, as a rising gold price pushed margins to record levels, offsetting the impact of soaring costs across the industry and helping the miner treble its dividend.
But the firm’s shares fell 13 per cent as investors disappointed by its outlook took fright.
The Tanzania-focused company last month posted a two per cent dip in full-year production to 688,278 ounces, after outages at its Buzwagi mine held back output in the final quarter.
But with power disruptions set to continue into 2012, it set its target for the year yesterday at a modest 675,000 to 725,000 ounces — forecasting what could be another drop.
Costs, meanwhile, jumped 22 percent on the back of industry wide inflation in, for example, the cost of materials, but also a higher headcount and increased use of more expensive generator power to keep mines working, with cash costs per ounce coming in at $692.
The miner forecast a similar rate of increase for 2012, with cash costs of $790 to $860 per ounce.
The soaring cost of production, the darker side of rising prices in recent years, is becoming an increasingly painful issue particularly for miners in newer frontiers like West and East Africa.
Chief exec Greg Hawkins said the miner would fight rising costs with increased productivity and efforts to make its workforce as local as possible.