UPDATE 1-African Barrick to beat output target, cost cuts on track

Wed Oct 30, 2013 4:04am EDT
 
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LONDON Oct 30 (Reuters) - Tanzania-focused miner African Barrick Gold said it would exceed its annual production target and was on track with a cost-cutting plan, giving hope that the company's new boss is starting to turn the company around.

The FTSE 250 company, whose poor performance meant it was under pressure even before a gold price rout began in April, said it would produce more than 600,000 ounces. It had said in July that output would be at the upper end of previous guidance of 540,000 to 600,000 ounces.

Bradley Gordon, appointed as chief executive in August, said in a statement on Wednesday that, as a result, cash costs would be at the lower end of its guidance of $925-$975 per ounce.

Third-quarter pretax profit of $31 million compared with the $34 million it made in the same period last year, on a realised gold price which was 22 percent lower.

Spot gold was trading at $1,346.11 early on Wednesday.

The company said it was on track to meet a goal of over $100 million in cost reductions this year to help improve profitability in a lower gold price environment.

African Barrick is one of many precious metal miners battling to turn a profit after gold recorded the steepest falls in a generation earlier this year from which it has yet to recover. The price of gold has fallen over 20 percent so far this year, prompting many producers to shelve projects, reduce overheads and put non-core assets on the block.

The company, 74 percent-owned by Canada's Barrick Gold , said an expansion project at its Bulyanhulu mine was on track to start production in the first quarter of next year.

A plan to mine a different part of its North Mara mine, however, would be deferred while it carried out further studies, it added.

Shares in African Barrick, which have slumped 61 percent over the last year, closed at 170.1 pence on Tuesday, valuing the company at 702 million pounds ($1.13 billion).