Barrick Gold Corp. (ABX) said the Lumwana copper mine, acquired as part of its C$7.3 billion ($7.4 billion) takeover of Equinox Minerals in 2011, has disappointed because of production costs.
“The short-term performance has been unacceptable,” Chief Executive Officer Jamie Sokalsky said today at a conference in Toronto organized by TD Securities Inc. “The initial indications are that the life-of-mine costs are higher than initially anticipated.”
Sokalsky, who took over as CEO in June, said the company is updating its long-term plan for the Zambian mine and will discuss its guidance on Feb. 14, when Barrick reports fourth- quarter earnings.
Barrick may take a writedown on Lumwana for the quarter, according to Greg Barnes, an analyst at TD Newcrest Inc. in Toronto. The company has $3.5 billion of goodwill on its balance sheet that’s associated with the Equinox deal, he said in a note Jan. 18.
“We need to make sure the mine that we bought, the asset that we bought, can deliver to the extent that we thought it would when we bought it,” Sokalsky said to reporters after his presentation.
“It’s not just about the short term,” he said. “This is a 30-year plus mine life.”
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