Barrick profit lifted by gold price; raises dividend

Wed May 2, 2012 12:39pm EDT
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By Euan Rocha

TORONTO (Reuters) - Barrick Gold (ABX.TO: Quote) raised its dividend by 33 percent on Wednesday and reported a higher quarterly profit, but worries about costs at its copper operations pulled down the shares of the world's top gold miner.

The Toronto-based miner reaffirmed full-year gold production and cost forecasts, but copper output costs at its Lumwana mine in Zambia were higher than expected, and Barrick said it expects production from the mine to fall in the ongoing quarter, due to mill maintenance work.

Barrick shares fell 2.6 percent in midday trading and were among the top drags on the Toronto Stock Exchange's benchmark index on Wednesday. Barrick's New York-listed shares were down 2.7 percent at $39.34.

"Costs were higher and the copper production was not what everybody was expecting, so that's putting pressure (on the stock)," said Sid Mokhtari, director of institutional equity research at CIBC World Markets.

In a nod to investors who have been anxious for dividend increases from the cash-rich gold miner, Barrick raised its quarterly payout to 20 cents a share from 15 cents. The company is holding its annual shareholder meeting in Toronto on Wednesday.

Shares of Barrick and other gold miners have languished in recent months despite a strong gold price as investors have been concerned by rising costs and operational setbacks.

Gold miners have also faced a tougher time wooing investors recently due to the lure of exchange traded funds invested in the precious metal. Many see such funds as ideal vehicles for exposure to gold as they are not affected by the political and operational risks faced by miners.

The Arca Gold Bugs Index , which tracks stocks of the world's largest bullion miners, has fallen nearly 25 percent in the past 12 months even though the price of gold risen roughly 7.5 percent over the same period.   Continued...