By Alex MacDonald
LONDON--Tanzania's largest gold miner African Barrick Gold PLC
(ABG.LN) expects to reach the top end of its gold output guidance
range in 2013, but has built in an allowance for unexpected events
after having suffered a series of setbacks over the past few years,
said the company's chief executive Wednesday.
African Barrick Gold's shares were down 7.9% at 314 pence a
share at 0922 GMT after it said it would produce between 540,000
troy ounces and 600,000oz of gold in 2013, marking the fourth
consecutive annual drop since it listed its shares in 2010. The
gold miner reported a 9% drop in gold output in 2012 to 626,212oz,
due in part to the loss of 300 operators who resigned in order to
secure their pensions following a change to Tanzania's pension
laws.
"We are aiming for the top end of the range...[but] we have
allowed ourselves a 10% risk factor," Greg Hawkins told Dow Jones
Newswires.
The Tanzanian gold miner lost about 40,000oz of gold output in
2011 due to electricity shortfalls after a drought in Eastern
Africa resulted in less hydro-power generation within Tanzania's
power grid. The company then began to invest in back-up diesel
power generation at all its mines.
In 2012, the Tanzanian government changed its pension laws which
resulted in nearly 300 skilled employees resigning at its flagship
Bulyanhulu mine in order to secure their pensions. The company is
now hiring new employees in order to restore production to normal
levels.
Mr. Hawkins said that ABG expects to produce on par with the
590,000oz produced from its three key mines--North Mara, Buzwagi
and Bulyanhulu--in 2013. Tulawaka, the fourth mine, isn't expected
to contribute much since it is due to close in 2013, he said.
While North Mara and Buzwagi are expected to deliver steady
output in 2013, Bulyanhulu will ramp up over the next two quarters
as its re-hires employees and resolves production setbacks linked
to paste fill and equipment availability, he said. Paste fill is
used to reinforce the structure of underground mines.
Mr. Hawkins said the company's focus for the year ahead will be
to make sure it is able to generate more cashflow from its
operations by deploying capital more effectively. The company has
already cut its sustaining capital expenditure by $50 million and
reduced its general and administrative costs by 15%. He said there
were no cost savings targets in mind but "we're not looking for
small numbers. It's a significant exercise."
Mr. Hawkins said the company will start to execute on cost
savings measures as soon as they are identified and will update the
market every quarter on its achievements.
He called on investors to "stick with us" during the current
year as it embarks on an operational review to extract more value
from every dollar invested to produce an ounce of gold. To this
effect, the company has declared a 2012 full-year dividend of
$0.163 a share, on par with its 2011 dividend, despite lower
cashflow.
Write to Alex MacDonald at alex.macdonald@dowjones.com
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