African Barrick Gold Plc (ABGL.L) reported higher-than-expected earnings in its first full-year results since listing, as strong gold prices outweighed a decline in production and lifted its shares.
Net profit surged to $218.1 million, exceeding the $204.8 million consensus forecast from Thomson Reuters I/B/E/S, against $58.6 million a year earlier.
The gold miner, which floated in London last March, expects to produce between 700,000 and 760,000 ounces of gold in 2011.
We have kept a reasonable range to take into account some risks ... but there are plenty of opportunities to get some growth, Chief Executive Greg Hawkins told Reuters on Wednesday.
The group said in January it had produced 700,934 ounces in 2010, missing its downwardly revised target, although output issues at the Buzwagi mine had been resolved.
The shares were up 3.0 percent by 0941 GMT, making them the top performers in the FTSE 100 index .FTSE at that time.
These results reinforce our view that African Barrick represents a clear valuation anomaly in the gold space, said Dominic O'Kane, analyst at Liberum Capital, adding that the miner's organic growth comes with lower execution risk than most of its London-listed peers.
The Tanzania-focused company said expansion projects at all four of its mines remained on track and it aimed to reach 1 million ounces of production a year by 2014.
We think we can get most of the way by what we have in the portfolio today, Hawkins said, adding that if it sees a sensible acquisition it will attempt to bolt that on as well.
He warned that cost pressures are affecting the mining sector, although he noted that African Barrick was at or below the mid point of the industry cost curve.
There are a range of measures that we have undertaken this year in terms of cost control to try to keep a lid on it, but there is a bit of a rising tide there no doubt, he said. Our costs are driven a lot by labour, energy and the commodities that we use in our production.
The company expects cash costs to increase to between $590 and $650 an ounce this year from $569 in 2010.
Earlier this month, London-listed rival Randgold Resources (RRS.L) posted a 43 percent jump in full-year profit after gold XAU= rose to record highs, although prices have fallen back this year.
We believe there are a lot of good fundamentals for the gold price, Hawkins said. We are very conscious on the cost control side to make sure we can preserve our margin.
African Barrick is a unit of Barrick Gold Corp (ABX.TO), the world's biggest gold producer, which is due to release earnings on Thursday.