Barrick Gold, World's Biggest Gold Producer, Reports Huge Profit Plunge In Q2 On Massive Selling Price Drop, Impairment Charges

  @MikeObel m.obel@ibtimes.com on

Barrick Gold Corporation (NYSE:ABX), the world's biggest gold producer, said Thursday its second-quarter profit fell 22 percent as the selling price of the yellow metal plummeted, a key Chilean project suffered a production setback and it booked massive impairment charges. The Toronto company also cut its dividend by 75 percent and reduced its 2013 capital spending guidance.

The company reported a net loss of $8.56 billion, or $8.55 per share, compared with a profit in the year-earlier period of $787 million, or 79 cents per share. Excluding one-time items, Barrick earned $663 million, or 66 cents per share, compared with the adjusted second-quarter 2012 earnings of $821 million, or 82 cents per share.

Revenue, which was hammered by a 24 percent drop in the price of gold in the April-through-June period, fell 1.3 percent to $3.2 billion from $3.24 billion.

Barrick had $8.7 billion in after-tax impairment charges, largely driven by the gold price drop. It also announced a cut in its planned 2013 capital spending to between $4.5 billion and $5 billion, down from its earlier projection of $5.7 billion to $6.3 billion. The comany also reduced its cost of sales guidance to between $7.2 billion and $7.8 billion, down from $7.9 billion to $8.4 billion.

The bulk of Barrick's impairment charges stemmed from Chile's government ordering Barrick to halt production at its massive Pascua-Lama project, which straddles the Chile-Argentina border, until various environmental issues were resolved, forcing a $5.1 billion impairment.

Total production edged up to 1.81 million ounces from 1.74 million ounces.

Barrick's cost of sales rose to $1.82 billion from $1.73 billion in the second quarter of last year.

“Over the past year, we have taken and are continuing to take a series of steps to reduce costs as part of our disciplined capital allocation framework, which allowed us to respond quickly to the new metal price environment," the company said in a statement. "We have reduced 2013 budgeted capital and costs by about $2 billion which has offset the cash flow impact of the drop in gold and copper prices that has occurred this year. We have reduced all-in sustaining cost guidance by about $100 per ounce this year from levels which are the lowest of our peers."

Barrick, citing current conditions, also cut its quarterly dividend to 5 cents per share from 20 cents per share. The dividend is payable on Sept. 16, to shareholders of record at the close of business on Aug. 30. The move comes a day after fellow gold miner Kinross Gold Corporation (NYSE:KGC) suspended its dividend after posting a second-quarter loss on a big impairment charge.

 

 

 

Join the Discussion
Nintendo's Newest Kirby Game Is A Total Detour
Nintendo's Newest Kirby Game Is A Total Detour
Fitbit's First Activity Watch Falls Short
Fitbit's First Activity Watch Falls Short
Dying Light Is The Spiritual Successor To 'Dead Island'
Dying Light Is The Spiritual Successor To 'Dead Island'
The Last Mitsubishi Evolution
The Last Mitsubishi Evolution
The i8 Is Proof BMW Should Make More Mid-Engined Cars
The i8 Is Proof BMW Should Make More Mid-Engined Cars
QD Vision Shows Off Cheap 4K TVs
QD Vision Shows Off Cheap 4K TVs

More Video