CORRECT: African Barrick Gold 3Q Net Profit Drops On Output Setbacks

Anglo-Tanzanian miner African Barrick Gold PLC (ABG.LN) Friday said its third quarter net earnings fell as higher achieved gold prices failed to offset production setbacks.

Net earnings fell 8% to $39.9 million in the three months ending Sept. 30 from $43.3 million in the same period the previous year, while earnings before interest taxes, depreciation and amortization, or Ebitda, fell 3% to $89.3 million from $91.9 million a year ago.

Third quarter net earnings and Ebitda beat analysts' expectations of $39.6 million and $84.2 million, based on a Dow Jones Newswires poll of four analysts.

The drop in net earnings and Ebitda was driven by a 23% drop in third quarter gold production to 164,996 troy ounces, which more than offset a 29% rise in achieved gold prices to $1,233/oz.

Production was adversely impacted by a loss of about 10,000 ounces in forecast output from the Tanzanian Buzwagi mine after the company suspended 40% of its mining department due to systematic fuel theft from the mine.

The company reaffirmed Friday its guidance to produce around 716,000 ounces in 2010, in line with last year's output. The guidance was cut twice within three months due to issues at Buzwagi. The guidance was first cut in July due to delays in accessing high grade ore at Buzwagi and was cut again last week due to fuel theft.

Cash costs are now forecast at $556/oz for 2010 due to the additional cost linked to issues at Buzwagi, the company said.

"We view the lower production levels as temporary and the expected production for Buzwagi over the life of mine remains unchanged," said the company's chief executive Greg Hawkins in a statement.

African Barrick Gold, the result of a spinoff earlier this by Canadian miner Barrick Gold Corp. (ABX), holds four gold producing mines in northwest Tanzania--Bulyanhulu, Buzwagi, North Mara and Tulawaka. Barrick Gold still retains a 75% stake in the London-listed miner.

African Barrick Gold Thursday closed at 550 pence, down 1.3% on the day and about 25p below its 575p a share offer price on the day of its initial public offering in March.

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

Barrick Gold (NYSE:ABX)
Historical Stock Chart
From Jun 2024 to Jul 2024