July 30 (Bloomberg) -- Barrick Gold Corp., the world’s largest gold producer, said second-quarter profit rose 1.4 percent because of increased output and higher bullion prices.

Net income climbed to $492 million, or 56 cents a share, from $485 million, or 55 cents, a year earlier, Toronto-based Barrick said today in a statement. Profit excluding one-time items was 49 cents a share, topping the 39-cent average estimate of 22 analysts surveyed by Bloomberg.

Chief Executive Officer Aaron Regent is working to increase production of bullion, which has held its value in the past year amid the first global recession since World War II. The company is trying to lower production costs by developing new projects, which will add output of about 2.6 million ounces annually by 2013, Regent said today on a call with analysts.

“Their cash costs are coming down quicker than I expected,” Kerry Smith, an analyst at Haywood Securities Inc. in Toronto, said today in a telephone interview. “They seem to be thinking they’ll get added benefit on the cost side” from lower prices for chemicals and fuel.

Barrick rose C$1.07, or 3 percent, to C$36.82 at 4:10 p.m. in Toronto Stock Exchange trading. The shares have declined 18 percent this year.

Sales Rise

Second-quarter sales gained 3.2 percent to $2.03 billion, the company said today. Barrick produced 1.87 million ounces of gold in the period, up from 1.86 million ounces a year earlier. Production costs fell to $452 an ounce in the second quarter from $484 in the prior period. A year earlier, costs were $434 an ounce, the company said.

The average price of Barrick’s second-quarter gold sales rose 3.7 percent from a year earlier to $931 an ounce, the company said.

Gold futures climbed 5.7 percent this year to $934.90 an ounce in New York and rose 2.5 percent in the past 12 months. The precious metal, which reached a record $1,033.90 in March 2008, has gained for eight straight calendar years.

Barrick repeated its forecast for 2009 gold production of 7.2 million to 7.6 million ounces at total cash costs of $450 to $475 an ounce. The company expects gold output to rise to 7.7 million to 8.1 million ounces next year, helped by the scheduled start of mining at its Cortez Hills project in Nevada.

Last year, Barrick produced 7.66 million ounces of gold at average costs of $443 an ounce.

Pascua-Lama

Barrick said on May 7 that it will start building its $3 billion Pascua-Lama mine project on the Chile-Argentina border after the two countries resolved a tax dispute over the project. The company forecasts the mine will yield as much as 700,000 ounces of gold and 25 million ounces of silver annually over an expected life of at least 25 years after operations start in 2013.

“All those new mines they’re bringing on will have lower cash costs than the corporate average today,” Haywood’s Smith said.

Barrick began production at its Buzwagi mine in Tanzania in May. Cortez Hills and the Pueblo Viejo project, which is being developed in the Dominican Republic, are meeting their budgets and are on schedule to start production in 2010 and 2011, respectively, Alexander J. Davidson, a Barrick executive vice president, said in a May 20 interview.

To contact the reporter on this story: Rob Delaney in Toronto at robdelaney@bloomberg.net.

Last Updated: July 30, 2009 16:23 EDT