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African Barrick Sees Lowest Gold Output Since London Listing

Updated on

Feb. 13 (Bloomberg) -- African Barrick Gold Plc, the Tanzania-focused producer of the precious metal, forecast the lowest output since its shares began trading in London in 2010 amid a review of operations to cut costs.

The company targets production of 540,000 ounces to 600,000 ounces of gold in 2013, a drop of as much as 14 percent from last year’s figure of 626,212 ounces. Costs will be $925 to $975 an ounce, it said in a statement today. The stock fell 11 percent to 302 pence by the close, the lowest since it listed in London.

African Barrick has been dogged by operational setbacks since it was spun off from Toronto-based Barrick Gold Corp., and has struggled to meet production targets. The company is reviewing its operations to cut costs that have ballooned by 67 percent since 2010.

“Another disappointing result from a serial disappointer,” Numis Securities Ltd. said in a note to investors. Numis had predicted that the 2013 production target would be 643,000 ounces at a cost of $918 an ounce.

African Barrick is aiming for the “top end” of its output target, and under “normal” conditions its mines should produce about 600,000 ounces a year, Chief Executive Officer Greg Hawkins said in a telephone interview. The company will produce about 650,000 ounces in 2014 after an expansion at its Bulyanhulu mine. Output may increase to about 700,000 ounces in 2015, Hawkins said.

African Barrick reported full-year net income of $59.5 million compared with $274.9 million a year earlier. Sales fell 11 percent to $1.09 billion, the London-based company said.

Barrick Gold ended talks last month to sell its 74 percent stake in African Barrick to China National Gold Group Corp. Barrick’s plan to dispose of its holding has “not gone away completely,” Hawkins said.

To contact the reporter on this story: Thomas Biesheuvel in London at tbiesheuvel@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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