Barrick earnings flat (April 26, 2001)

Barrick Gold (ABX-T) has reported flat net earnings of US$72 million (or 18 per share) on sales revenue of US$308 million for the first three months of 2001.

During the same period a year earlier, the company earned US$72 million (18 per share) on US$323 million. Operating cash flow between the two periods fell to US$165 million from US$177 million.

Thanks to its hedging program, Barrick was sheltered from lower gold prices, which have taken a bite out of many other gold producers’ bottom lines. The company’s premium gold sales program realized an average price of US$340 per oz. during the recent quarter. This was a US$76 premium over the quarter’s average spot price. Under the program, Barrick has sold forward production through 2002 at an average minimum price of US$340 per oz., and a portion thereafter at a minimum price of US$357 per oz.

Production for the quarter tallied 906,490 oz. at cash costs of US$152 per oz., compared with the year-ago 902,617 oz. produced at US$133 per oz. The bulk of production came from the Goldstrike mines in Nevada (a combined 613,478 oz.) and the Pierina operations in Peru (205,766 oz.). This amounted to about 90% of the quarter’s production.

For 2001, Goldstrike is expected to churn out 2.3 million oz. at US$195 per oz. Production from the Rodeo deposit there is slated for the fourth quarter. Pierina is expected to produce 870,000 oz. at US$40 per oz. Overall, Barrick pegs 2001 production at 3.8 million oz. at US$156 per oz.

Barrick has completed first-phase development at the promising Bulyanhulu project in Tanzania. Commercial production began in early April and the mine is expected to produce 263,000 oz. at US$166 per oz. in 2001. By 2002, annual production will rise to about 400,000 oz. The company is already planning to further increase production to 500,000 oz. per year, Cash costs are expected to fall to US$130 per oz.

Barrick says earnings for 2001 should ring in around the 70-to-75-per-share range, with second-quarter earnings of about 17 per share.

At the end of March, the company had US$665 million in cash and working capital of US$539 million.