Barrick Did Not Strike Gold in Q3

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Barrick Gold Corp. (NYSE: ABX) reported third-quarter 2012 earnings this morning. The gold miner posted adjusted earnings per share (EPS) of $0.85 on revenues of $3.44 billion. In the same period a year ago, the company reported EPS of $1.38 on revenues of $3.97 billion. First-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.99 and $3.61 billion in revenues.

On a GAAP basis, the company posted EPS of $0.62, compared with EPS of $1.37 in the third quarter of 2011.

Jamie Sokalsky, the company’s CEO, said:

Despite some cost pressures, Barrick remains the lowest cost senior gold producer. … We’ve cut or deferred significant capital expenditures that were previously budgeted and we’re continuing to work toward optimizing our asset portfolio. As I have said, returns will drive production; production will not drive returns.

Barrick narrowed its guidance for the full 2012 fiscal year from a range of 7.3 million to 7.8 million ounces of gold to a range of 7.3 million to 7.5 million ounces of gold. The forecast for total cash costs also has been raised, from a range of $550 to $575 an ounce to a range of $575 to $585 an ounce. The company’s copper production forecast has been lowered to 450 million pounds and cash costs for copper production remained at $2.10 to $2.30 a pound.

In the third quarter, Barrick produced 1.78 million ounces of gold and 112 million pounds of copper. Gross cash margin on gold totaled $1,063 an ounce. The cash margin on copper totaled $1.19 a pound.

Barrick is the first of the gold miners to report earnings, with Goldcorp Inc. (NYSE: GG), Newmont Mining Corp. (NYSE: NEM), AngloGold Ashanti Ltd. (NYSE: AU) and Yamana Gold Inc. (NYSE: AUY) to follow in the next week or so. Cash costs will weigh on all, just as they have on Barrick, but it is reasonable to expect cash costs for gold production nearer $800 than $600 an ounce for the others.

The company’s shares are trading down about 3.8% this morning, at $38.95 in a 52-week range of $31.00 to $53.26. The consensus target price for the shares was around $54.90 before today’s report.

Paul Ausick

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