Barrick Gold Earnings Recover from Fourth-Quarter Debacle

On an IFRS basis, the company posted EPS of $0.85, compared with EPS of $1.04 in the first quarter of 2012. The company attributes the lower earnings to lower realized gold and copper prices, lower production and higher costs. No surprises there.

The adjustments included a foreign exchange loss of $63 million, another $30 million in one-time expenses and a $17 million unrealized gain on non-hedge derivatives. Barrick no longer hedges any of its production.

Jamie Sokalsky, the company’s CEO, said:

It is very rewarding to see that our cost reduction efforts have begun to take effect and are reflected in low all-in sustaining costs of $919 per ounce and total cash costs of only $561 per ounce this quarter. We have also further reduced total capex, exploration and all-in sustaining cost guidance for the full year.

Barrick reaffirmed its guidance for the full 2013 fiscal year, calling for production in a range of 7.0 million to 7.4 million ounces of gold. The forecast for total cash costs rises from $584 per ounce of gold in 2012 to a range of $610 to $660 per ounce.

Copper production is still expected to total 480 million to 540 million pounds, and the company’s cash costs for copper production are expected to be in the $2.10 to $2.30 per pound range, compared with the 2012 cost of $2.17 per pound.

In the first quarter Barrick produced 1.8 million ounces of gold and 127 million pounds of copper. The average realized gold price was $1,629 an ounce, and the average realized copper price was $3.56 a pound.

In the fourth quarter of 2012, Barrick took a write-down of about $4 billion, most of which was attributed to its copper assets. To try to avoid a repeat, Barrick already has announced a cut to its capex spending and a cut to its all-in sustaining costs. The company also plans to expand gold production in 2014 to 8 million ounces.

Shares of Barrick are up nearly 3% in premarket trading this morning, at $18.10 in a 52-week range of $17.51 to $43.30. Thomson Reuters had a consensus analyst price target of around $41.70 before today’s report.