African Barrick Gold Plc, the largest producer of the metal in Tanzania, said second-quarter profit fell 57 percent as output declined and costs expanded.
Net income slid to $29.9 million from $69.8 million a year earlier, the London-based company said today in a statement. Attributable gold output fell 11 percent to 153,099 ounces.
African Barrick, after struggling to meet output targets, has forecast the lowest annual production since its shares began trading in London in 2010. Second-quarter costs rose 46 percent to $950 an ounce and sales fell 14 percent to $266.9 million. It fell 16 percent to 317 pence by the close of London trading, the steepest decline since the company listed in March 2010.
“We remain concerned about the continued high level of cash costs, and we believe these results will do little to improve the market’s trust in the company’s operating targets,” JPMorgan Chase & Co. analysts said today in a note to investors.
African Barrick in 2010 cut its output forecast to about 716,000 ounces from a range of 750,000 to 800,000, and a first estimate of 800,000 ounces to 850,000 ounces. The cuts followed delays and theft of fuel at its Buzwagi project. Last year, it produced 688,278 ounces after a forecast of 700,000 to 760,000.
“We’ve had to keep a real strong focus and work our way through the first part of the year, which we knew would be pretty tough, but we’re confident about how we’re looking for the back half,” Chief Executive Officer Greg Hawkins said in an interview.
The company kept its 2012 output target of 675,000 to 725,000 ounces and sees per-ounce cash costs at the “upper” end of its $790 to $860 guidance. The costs will drop in the second half, mostly in the last quarter, Hawkins said.