Barrick First-Quarter Profit Rises 2.8% After Gold Gains

Barrick Gold Corp. (ABX), the world’s largest producer of the metal, reported a 2.8 percent increase in first-quarter profit after gold prices rose.

Net income advanced to $1.03 billion, or $1.03 a share, from $1 billion, or $1, a year earlier, Toronto-based Barrick said today in a statement. Profit excluding impairment charges and other one-time items was $1.09 a share, matching the average of 18 estimates compiled by Bloomberg.

Sales rose 18 percent to $3.64 billion. The company raised its quarterly dividend to 20 cents a share from 15 cents and reiterated its 2012 production forecast.

“Barrick has a reputation as being one of the best operators and being the ‘Steady Eddie’ of the gold-mining sector, and it’s deserved,” George Topping, an analyst at Stifel Nicolaus & Co. in Toronto, said in a telephone interview yesterday.

Chief Executive Officer Aaron Regent plans to boost annual production to about 9 million ounces of gold by 2016, from as much as 7.8 million ounces forecast this year. Gold, which has risen for 11 straight years, averaged $1,694 an ounce in the quarter in New York, 22 percent more than a year earlier.

First-quarter gold production was 1.88 million ounces, down from 1.96 million ounces a year earlier. Topping estimated 1.79 million ounces.

Higher Costs
So-called total cash costs rose 25 percent to $545 an ounce. Brian Yu, an analyst at Citigroup Inc. in San Francisco, estimated $559 while Stephen Walker, a Toronto-based analyst at RBC Capital Markets, estimated $577.

Barrick reiterated that gold production in 2012 will be 7.3 million to 7.8 million ounces with total cash costs of $520 to $560 an ounce.

Barrick’s Pueblo Viejo project in the Dominican Republic is expected to begin production in the middle of this year, the company said. The Pascua-Lama mine, on the border between Chile and Argentina, will start up in mid-2013.

Barrick said it’s reviewing the cost and scheduling for Pascua-Lama, which is being affected by labor and commodity cost pressures. About 70 percent of the current $4.7 billion to $5 billion cost estimate has been committed, it said.

The cost challenges at Pascua-Lama and a potential delay in startup will probably “reinforce concerns about the wisdom of proceeding with development on large longer term development projects during a period of rampant cost inflation,” Greg Barnes, a Toronto-based analyst at TD Newcrest, said in a note today.

Barrick fell 2.7 percent to C$38.80 at the close in Toronto. The shares have dropped 16 percent this year.

(Barrick started a conference call at 4:30 p.m. New York time to discuss results, accessible in North America at 1-800-381-7839 and for international callers at 1-212-231-2900.)