Barrick Earnings Disappoint With Output Lower Than Expected

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Barrick Gold Corp., the largest producer of the precious metal, reported profit and sales that trailed analysts’ estimates after output declined more than expected.

Earnings excluding one-time items were 5 cents a share, Toronto-based Barrick said in a statement Monday after the close of trading, missing the 9-cent average of 19 estimates compiled by Bloomberg. Revenue declined 15 percent to $2.25 billion, less than the $2.35 billion average estimate.

The company produced less gold than expected at its Cortez mine in the U.S. and its Pueblo Viejo mine in the Dominican Republic, said Phil Russo, an analyst at Raymond James Financial Inc. in Toronto. Its “core mines” aren’t set to collectively improve until the second half, he said in a note Tuesday.

Barrick Executive Chairman John Thornton, who took over from founder Peter Munk a year ago, is trying to streamline and decentralize the company while improving returns after its stock price fell for four straight years. The company is selling less-profitable assets as it aims to reduce net debt by at least $3 billion this year.

On Monday the company said it began a process to sell a stake in its Zaldivar copper mine in Chile, while potential buyers are conducting site visits at Barrick’s Cowal mine in Australia and its Porgera joint venture in Papua New Guinea.

Zaldivar is valued at $1.8 billion after tax, and selling a stake in the mine will help Barrick to achieve its debt-reduction target, Andrew Quail, an analyst at Goldman Sachs Group Inc., said in a report Tuesday.

Chile Discovery

Barrick fell 1.6 percent to C$15.27 at 9:13 a.m. in Toronto. The shares are up 22 percent in Toronto this year through Monday’s close, outperforming the 12 percent increase in the Standard & Poor’s/TSX Global Gold Sector Index. Gold futures were down 0.1 percent in New York.

Barrick produced 1.39 million ounces of gold in the first quarter, compared with 1.59 million a year earlier and the 1.49 million average of eight estimates compiled by Bloomberg.

Profit fell amid both reduced output and lower gold prices. Net income dropped to $57 million, or 5 cents a share, from $88 million, or 8 cents, a year earlier.

Barrick said it had made a “significant” gold discovery at Alturas in Chile’s El Indio belt. Drilling so far suggests the deposit is geologically similar to the one at Veladero, a Barrick gold mine in Argentina, with the potential to be “significantly higher grade,” the compay said.

(Barrick scheduled its annual shareholders meeting in Toronto for Tuesday at 10 a.m. The company will hold a conference call the same day to discuss the first-quarter results at 4:30 p.m. New York time, accessible in North America at 1-866-696-5910 and for other callers at 1-416-340-2217. The passcode is 6734599.)

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