African Barrick Gold Plc, a unit of the world’s biggest miner of the metal, expects to touch the higher end of its target production range this year as it boosts output at its Bulyanhulu mine in Tanzania.
Production should reach 650,000 ounces to 690,000 ounces this year, African Barrick said today, reiterating its February target. First-quarter output increased 18 percent to 168,400 ounces and further expansion at Bulyanhulu has been approved, it said, while announcing earnings for the period.
“We’ll probably be at the higher end of that range,” Chief Executive Officer Brad Gordon said today in an interview. Production in “2015 will be significantly higher again.”
Gordon is seeking to expand as well as cut costs at the company’s mines in Tanzania to lift the fortunes of African Barrick, which has been dogged by operational setbacks since it was spun off from Toronto-based Barrick Gold Corp. in 2010. Profit for the first three months of the year gained 8 percent to $22.4 million, the company reported today.
The shares rose as much as 7.1 percent to 265.90 pence, the steepest intraday gain since March 3, and traded at 254.60 pence as of 9:38 a.m. in London.
African Barrick last year reported its first annual production gain since it was listed in London in 2010. While it had targeted then an annual production of 1 million ounces in 2014, it posted output declines for three straight years and was surpassed by rivals Randgold Resources Ltd. and Petropavlovsk Plc. Gordon was appointed CEO in August after the shares slumped 73 percent under his predecessor.
So called all-in sustaining costs for the second quarter would be similar to the $1,131 per ounce achieved in the first, Gordon said today. Costs would fall in the second half, he said.
Barrick will probably continue to sell its stake in the unit, Gordon said. Barrick sold a 10 percent stake in African Barrick last month for $188 million, cutting its holding to 64 percent.
“We’re still non-core to them so I would expect that to continue,” he said. “As to timing and pricing, that’s really a question for Barrick.”