UPDATE: African Barrick Gold Cuts 2010 Output After Oil Theft

U.K.-listed African Barrick Gold PLC (ABG.LN) Thursday said it has lowered its full-year gold output guidance after it was forced to suspend a large portion of its mining department due to the discovery of systematic onsite fuel theft.

The company is now anticipating full-year gold production on a par with the 716,000 troy ounces of gold produced in 2009, marking a second downgrade to its full-year production guidance since the company was listed on the London Stock Exchange in March.

ABG initially guided towards full-year gold output of between 800,000 ounces and 850,000 ounces at the launch of its IPO and subsequently downgraded its target to between 750,000 ounces and 800,000 ounces during the company's interim results in July. At the time, ABG said the downgrade was due to delays in accessing higher ore grades at Buzwagi.

ABG shares opened 9.3% lower or down 58.5 pence at 565p a share following the news.

"We have recently uncovered an organized and systematic onsite fuel theft which has impacted production at Buzwagi," the company said, referring to its Tanzanian gold mine. "Investigations into this matter indicate that criminal fuel theft syndicates have widely infiltrated our mining department."

ABG, which is 75% owned by Barrick Gold Corp (ABX), suspended 60 employees and a number of contractor representing over 40% of the mining department due to fuel theft. The suspension has delayed mining of higher grader ore and forced the company to process low grade stockpiles.

The incident will reduce full-year production at the company's Buzwagi mine by about 30,000 ounces.

"Despite the short-term impact on production, these actions were necessary to maintain the integrity of the operating environment at Buzwagi. It should also be noted that the lower production levels are temporary as a result of mining the low grade stockpiles and that the total ounces expected to be produced over the life of mine remains unchanged," the company said.

Equity analyst Cailey Barker of Numis Securities said he was "a little bit surprised" that the incident hadn't been brought to the market's attention sooner, but he noted that ABG may have been hoping to get more staff onsite quickly before it suffered further production delays.

ABG said it had hoped to secure enough operators to recover the 10,000 ounces of gold lost during the third quarter, but added that it has suffered delays and only secured about 20 operators from Barrick to restore mining operations and train a new team of operators.

ABG's revised full-year production guidance isn't a "huge downgrade" since "most people were fairly bearish" about the company's ability to meet its near-term production targets, Barker said.

Numis had previously forecast ABG's 2010 gold output at 738,000 ounces and is now cutting its full-year profit after tax estimate to $120 million from $150 million to reflect the lower output guidance.

-By Alex MacDonald, Dow Jones Newswires; 44 20 7842 9328; alex.macdonald@dowjones.com

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