Pierina boosts Barrick

Plenty of low-cost gold from the new Pierina mine in western Peru was the foundation of a good quarter for Barrick Gold (ABX-T), which posted a US$84-million profit on revenue of US$373 million.

The performance compares with earnings of US$67 million in the second quarter of 1998, made on revenue of US$293 million. Quarterly earnings per share increased to US20 cents from US$18 cents in 1999.

In the first six months of 1999, the company earned US$171 million, up from US$142 million in the first half of 1998; revenues totalled US$763 million, up from US$595 million.

Barrick’s first-half gold production is substantially higher than in 1998, rising to 2 million oz. from 1.5 million oz. the year before. The increase comes largely on the strength of new production from Pierina, which started pouring gold last November. Pierina produced 554,469 oz. in the first six months of 1999, accounting for the half-million-ounce increase in Barrick’s total gold production for the period.

The Pierina operation has made its presence felt in Barrick’s cost profile as well. Average cash costs of US$35 per oz. for the quarter and US$38 per oz. for the first half have brought the company’s average cash cost down to US$128 per oz. in the quarter and US$122 per oz. in the first half of 1999.

Production levels and costs at Barrick’s other operations were mainly steady, except at Bousquet, in northwestern Quebec, where production is up and costs are down, and Meikle in Nevada, which is going through a development phase and has lower production and higher costs than last year. The company is also maintaining a hedge program that gave it an average realized price of US$385 per oz., a premium of US$105 over the average spot price for the first six months of 1999.