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Shares in London-listed African Barrick Gold (LON:ABG) were falling by over 4% on Friday after rising costs and dipping production impacted the miner’s Q3 profit.
Reporting a 72% decline in third-quarter profit to $29 million, chief executive Greg Hawkins said the quarter was quite a challenging one for the company.
“We were expecting to see a step-up in production levels leading into the end of the year and 2013, but there have been production interruptions and issues across each of our sites.
“The ramp-up in grade at North Mara is positive and expected to continue in fourth quarter, but we have been disrupted in our efforts to mine it at a normal rate given an increase in illegal mining operations,” he said in a statement.
The Tanzania-focused company lowered once again its production guidance, citing illegal mining activities at North Mara and lower-than-planned production levels at Bulyanhulu and Buzwagi.
The miner warned its 2012 production would be between 5% and 10% lower than the bottom of its previous range of 675,000 ounces to 725,000 ounces of gold.
African Barrick Gold, a unit of Canada’s Barrick Gold, is also projecting a cash cost of $900/ounce to $950/once for the financial year, higher than the $790 to $860 figure it forecast in February.
African Barrick’s majority shareholder, Barrick Gold (TSX:ABX) is in talks to sell its 74% stake to China National Gold Group Corporation.
3 Comments
Secret squirrel
Was anyone expecting anything different in the results of Africa barrick gold? I had a quiet chuckle when the Tanzanian spokesman for the company ‘publicly announced they were going to lower costs by removing the high cost expat labour and increase production in the same sentence’. The expats are there to ensure the company assets are not taken back to the village and try to ensure the mine runs to a western standard…. Otherwise what company would pay for expats if you could pay a villager less than $30usd per day ??? ABG want to run out of Tanzania and offload that 5 mine headache as fast as they can. They should be happy they made a profit as next year won’t be easier, it’s going to get harder and harder ‘ be prepared for more announcements of ‘lower than forecast results?.even $1300 an ounce is profitable so they still have some fat in the wallet to pay for even more FFU soldiers, police and high walls to try to keep the thieves out… Or the thieves in’ . Good luck china gold’go in with a big stick, pay off the soldiers and police , let them do there job and turn a blind eye’ then watch the profits role in?… Until then amuse yourselves readers with the stories on Tulawaka, north Mara, bulyanhulu,buzwagi, – type in riot , or shooting,death, strike,policeman killed, or fraud and then the name .funny thing is Alot never made the papers as ABG had ex Australian federal police covering their backsides as internal investigators whoops’ shhh secret squirrel.
Concerned Shareholder
Excuses more Excuses – ABG has weak managemnet who are totally out of thier depth…!
dundee2004
I agree with Secret Squirrel, the expats were there to protect the company’s investment and run the mine according to Barrick standard. If not for these expats ABG-Buzwagi might not recovered from financial losses due to fuel theft in 2010. I believe chopping off some of the expats for economic reason and employment opportunity for Tanzanian people is one of the best alternative for the management; but it is very risky for the mine’s survival.