|Barrick downgrades 2012 output: costs soar to $965/oz!|
October 29th, 2012
Miner African Barrick Gold plc has downgraded its 2012 production forecast and reported soaring production costs, hurting quarterly profit, as suitor China National Gold Group Corporation (CNGGC) continues its due diligence on the company.
Reuters reports that Canadian-based Barrick Gold, which owns 74% of London-listed African Barrick, said in August that it was in talks to sell all or part of its stake to a Chinese buyer.
The Tanzania-focused company said it now expected full-year production to be 5 to 10% lower than the bottom of its previous forecast of 675,000 to 725,000oz, and guided that the cost of producing the metal would be higher than it originally thought.
Commenting on the potential stake acquisition by CNGGC, African Barrick said that the Chinese firm's due diligence was ongoing and had included site visits.
“At this point there can be no certainty that any transaction will be forthcoming. We will provide further updates as and when it is appropriate,” the company said in a statement.
African Barrick posted net profit of US$29 million in the three months to September 30 ‒ a 72% drop compared to the same period last year on gold output which was 19% lower at 147,786 oz.
The cash cost per ounce sold rose to US$965 in the three months from US$950 in the previous quarter, African Barrick said, prompting it to raise its forecast for cash costs for the year to between US$900 and US$950/oz, higher than the US$790 to US$860 figure it forecast in February.
Production was hindered by rising illegal mining at its North Mara site while output at its Bulyanhulu and Buzwagi mines did not reach planned levels, the company said.
CNGGC is leading a drive offshore to help meet soaring demand for gold at home, driven by increasing affluence which has prompted higher demand not just for jewellery, but for gold from Chinese investors who want to use it as a hedge against inflation.