Thursday, Canadian gold miner Barrick Gold Corp. (ABX,ABX.TO), posted a net loss for the third quarter, compared to a profit in the same period last year, reflecting a US$ 5.7 billion charge related to the windup of its gold hedging program. Barrick's adjusted earnings for the quarter, however, rose from last year, helped by higher gold prices and lower cost of sales. The world's biggest gold company also reiterated its production forecast for 2009.
For the third quarter, the Toronto, Canada-based company posted a net loss of US$ 5.35 billion or US$ 6.07 per share, compared to net profit of US$ 254 million or US$ 0.29 per share in the year-ago quarter. The loss for the quarter included a non-cash accounting charge of US$ 5.7 billion related to Gold hedging program.
Net income, excluding charges for the quarter rose to US$ 473 million or US$ 0.54 per basic share from US$ 404 million or US$ 0.46 per basic share in the year-ago quarter.
On average, 21 analysts polled by Thomson Reuters expected the company to earn US$ 0.47 per share for the quarter. Analysts' estimates typically exclude one-time charges and gains.
In the previous second quarter, Barrick Gold's net income climbed to US$ 492 million or US$ 0.56 per share from US$ 485 million or US$ 0.55 per share in the prior-year quarter. Net income, excluding charges for the quarter declined to US$ 431 million or US$ 0.49 per basic share from US$442 million or US$ 0.51 per basic share in the year-ago quarter.
Sales for the recent third quarter increased to US$ 2.10 billion from US$ 1.88 billion, shy of analysts' consensus estimate of US$ 2.15 billion.
For the sequentially preceding quarter, sales increased to US$ 2.03 billion from US$ 1.97 billion in the year-earlier quarter.
For the third quarter, Barrick Gold reported production of 1.90 million ounces of gold at net cash costs of US$ 371 per ounce after applying credits from sales of non-gold metals such as copper and silver that are mined along with the gold or total cash costs of US$ 456 per ounce, compared to 1.94 million ounces produced at net cash costs of US$ 380 per ounce or total cash costs of US$ 466 per ounce in the prior-year quarter.
Cost of sales for the quarter was US$ 971 million, compared to US$ 1.03 billion last year. Average realized gold price for the quarter was US$ 971 per ounce, compared to US$ 874 per ounce in the year-ago quarter.
Operating cash flow for the quarter was US$ 911 million, up 67% from US$ 544 million in the corresponding quarter last year, reflecting higher adjusted net income and lower income taxes paid as a result of the production mix and the use of tax loss carry-forwards.
Barrick also benefited from its copper hedge position, realizing US$ 2.90 per pound, 9% higher than the average spot price.
Aaron Regent, president and chief executive officer, Barrick said, "Our operations delivered another strong quarter, positioning us well to meet our production and cost targets for the year."
Barrick said it took a number of important steps during the quarter to enhance its strategic positioning in what is expected to be a strong gold price environment. That included plans to eliminate its gold hedging program within 12 months.
The hedging program, which was designed to lock-in prices for future sales to provide insurance against a drop in gold prices, has been a particular concern for Barrick. The hedges prevented Barrick from taking full advantage of the rising price of bullion, which has recently been trading about US$ 1,000 an ounce.
For the nine-month period, Barrick reported a net loss of US$ 4.49 billion or US$ 5.12 per share, compared to net income of US$ 1.25 billion or US$ 1.42 per share in the year-ago period. Excluding charges, income for nine months dropped to US$1.21 billion or US$1.38 per basic share from US$1.38 billion or US$1.59 per share in the same period last year.
Sales for the period increased to US$ 5.95 billion from US$ 5.80 billion in the previous-year period.
Looking ahead for fiscal year 2009, Barrick said it is on track with its full year production guidance of 7.2-7.6 million ounces of gold at total cash costs of US$ 450-US$ 475 per ounce or net cash costs of US$ 360-US$ 385 per ounce.
For 2010, the company still expects production to increase to around 7.7-8.1 million ounces at lower total cash costs than in 2009.
Amongst others in the sector, Denver, Colorado-based Newmont Mining Corp. (NEM), Thursday reported a surge in profit for the third quarter, significantly above market projections, reflecting strong sales of gold and copper. Third-quarter net income attributable to Newmont stockholders was $388 million or $0.79 per share, higher than last year's $191 million or $0.42 per share. Excluding prior year's discontinued operations, income from continuing operations rose to $388 million or $0.79 per share from $182 million or $0.40 per share in the same quarter last year.
Newmont's revenues for the quarter increased to $2.05 billion from $1.37 billion in the prior-year quarter.
ABX is currently trading at US$ 36.70, up US$ 2.13 or 6.16%, on a volume of 6.25 million shares on the NYSE. In the past 52 weeks, the stock trended in a broad range of US$ 19.11 - US$ 42.10, with a three-month average volume of 12.79 million shares.
ABX.TO is trading at C$39.11, up C$2.10 or 5.67%, on a volume of 2.58 million shares on the Toronto Stock Exchange. In the past 52 weeks, the stock trended in a broad range of C$23.79 - C$49.87, with a three-month average volume of 4.10 million shares.
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