Oct. 30 (Bloomberg) -- African Barrick Gold Plc, Tanzania’s biggest gold producer, rose the most in more than a month after output increased and costs fell.
The shares climbed as much as 8.8 percent to 185 pence, the steepest intraday gain since Sept. 19., and traded at 178.5 pence by 9:39 a.m. Third-quarter gold output rose 11 percent to 164,719 ounces and full-year production will exceed a 600,000-ounce target, the company said in a statement. Cash costs fell 28 percent from a year earlier.
“We’re obviously delivering on performance and developing some consistency of results which is very, very pleasing,” Chief Executive Officer Brad Gordon said in an interview.
African Barrick is reviewing its operations and seeking to cut costs. The company has been dogged by operational setbacks since it was spun off from Toronto-based Barrick Gold Corp. in 2010 and has struggled to meet production targets. Gordon was appointed CEO in August after the shares slumped 73 percent under his predecessor.
“First decent quarter for a while so, while still not without its risks, the plans appear to be making some good effect,” Numis Securities Ltd. said in a note to investors.
The company, which is targeting $185 million in cost savings, said it’s on track to achieve $100 million of that this year and may exceed its goal as it reduces costs at its Bulyanhulu mine.
“We’ll more than achieve on where we’ve said we’ll be next year,’” Gordon said. “The real opportunity I see is at Bulyanhulu, which hasn’t been factored into any of the numbers as yet.”
Barrick Gold, the world’s biggest producer, sought to sell its 74 percent stake in African Barrick last year to China National Gold Group Corp. before talks broke down in January. Gordon said improving the assets will increase the chances of selling the business.
“Barrick are obviously very happy with the way the business is going,” he said. “The best thing we can do to increase the options for their exit is to get the share price up.”
Net income for the quarter fell 25 percent from a year earlier to $17.8 million, while sales declined to $221.1 million from $264.9 million, the company said. The average gold price dropped 20 percent to $1,326 an ounce.
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