Barrick Gold Profit Tops Estimates as Costs Beat

Barrick Gold Corp. (ABX), which saw merger talks with its largest rival disintegrate this month, reported earnings that topped analysts’ estimates after costs beat expectations.

First-quarter net income declined to $88 million, or 8 cents a share, from $847 million, or 85 cents, a year earlier, Toronto-based Barrick said today in a statement. Earnings excluding one-time items were 20 cents a share, topping the 19-cent average of 19 estimates compiled by Bloomberg. Sales fell to $2.63 billion from $3.4 billion, less than the $2.75 billion average estimate.

Barrick’s adjusted operating cost to produce an ounce of gold in the first quarter was $582 per ounce, compared with $564 a year earlier and the $614 average of three estimates. So-called all-in sustaining costs fell 11 percent to $833 an ounce. The company reported first-quarter production of 1.59 million ounces of gold, compared with 1.8 million ounces a year earlier and the 1.58 million average of four estimates.

Barrick and Newmont Mining Corp. (NEM) identified annual savings of $1 billion as part of a proposed merger in which Barrick was to offer Newmont shareholders a takeover premium of 13 percent, two people with knowledge of the matter said April 19. The talks were halted April 18 following disagreements, the people said, and the deal appeared dead by April 28, when the two miners exchanged a series of statements accusing each other of scuppering the negotiations.

Reworked Plans

Barrick, led by Chief Executive Officer Jamie Sokalsky, has sold about $1 billion of assets in the past year and reworked mine plans to focus on the most profitable ore as the company adjusts to gold prices that dropped 28 percent last year. While the Newmont deal would have made sense, it probably wasn’t “make or break” for Barrick, said Jorge Beristain, a Greenwich, Connecticut-based analyst at Deutsche Bank AG.

“Most people view them as being pretty far along on their cost-cutting and restructuring plans,” Beristain said in a phone interview before the results were released.

Barrick is holding its annual shareholders’ meeting in Toronto today, at which founder Peter Munk will retire as chairman. He’ll be replaced by John Thornton, a former Goldman Sachs Group Inc. president who is currently Barrick’s co-chairman.

(Barrick scheduled a conference call to discuss the results at 4:30 p.m. New York time, accessible in North America at 1-888-789-9572 and for other callers at 1-416-695-7806. The passcode is 6663097.)

To contact the reporter on this story: Liezel Hill in Toronto at lhill30@bloomberg.net

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net Steven Frank

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