Barrick Gold reins in costs; could suspend Chile project

Wed Apr 24, 2013 12:57pm EDT
 
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By Julie Gordon and Euan Rocha

TORONTO (Reuters) - Barrick Gold Corp (ABX.TO: Quote), making a painful adjustment to a sustained slump in bullion prices, reported progress in controlling costs on Wednesday and said it is further reducing capital spending, sending its shares higher.

The world's No. 1 gold producer also said it may suspend work at Pascua-Lama, its largest project under development, located high in the Andes Mountains. A Chilean court has halted some work at the project, which straddles the border of Chile and Argentina.

The Toronto-based miner also reported an 18 percent drop in first-quarter profit. The decline, attributed to a slump in gold and copper prices and volumes, was not as severe as analysts had expected.

Speaking at Barrick's annual general meeting in Toronto, Chief Executive Jamie Sokalsky said the company could stop spending on Pascua-Lama if the timetable for resolving regulatory issues at the project remains unclear.

"We're serious about disciplined capital allocation," he said. "That means we need to consider all options, including the possibility of suspending the project."

Barrick's shares were up 3 percent at C$18.55 on the Toronto Stock Exchange at midday on Wednesday. The stock has dropped more than 48 percent this year as the company struggled with setbacks at Pascua-Lama, the fall of gold prices, and a shareholder revolt over executive compensation.

A group of Canada's top pension funds, which are small but significant shareholders in the miner, spoke out last week against Barrick's $11.9 million signing bonus for co-Chairman John Thornton, the man tipped as Barrick's next chairman.

Shareholders rejected a nonbinding company resolution on executive compensation at Barrick's annual meeting on Wednesday, underscoring broad opposition to the bonus.   Continued...