February 13, 2019 / 1:26 PM / 2 months ago

Barrick sets bullish 2019 gold output target after Randgold deal

(Reuters) - Barrick Gold Corp on Wednesday forecast a double-digit jump in gold output this year, underscoring the growth potential of the world’s largest publicly traded bullion producer after it bought rival Randgold Resources last month.

FILE PHOTO: Mark Bristow, chief executive officer of Barrick Gold, speaks during an interview at the Investing in African Mining Indaba conference in Cape Town, South Africa February 5, 2019. REUTERS/Mike Hutchings/File Photo

The company expects to produce 5.1 million to 5.6 million ounces of gold in 2019, an increase of at least 13 percent from 2018 levels.

But the cost to produce that gold was forecast to be higher than many analysts expected. That, as well as uncertainty over several assets analysts had expected to be sold by now, and forecasts for a higher tax rate than expected, dented the stock.

Shares of Barrick fell 2.6 percent to $17.26 in morning trading.

Barrick, which spent $6.1 billion on the Randgold deal, has formed new management teams, cut administrative costs and begun to spend more on geology and other mine services, part of new Chief Executive Mark Bristow’s plan to set the combined company firmly apart from peers.

“We have all the ingredients to be successful,” Bristow said in an interview. “My job is to reshape the organization to optimize our ore bodies, our core assets, which are some of the best in the business.”

Beyond rising costs, Barrick faces stiff competition as the company will cede its crown as the world’s largest gold producer when Newmont Mining Corp closes its $10 billion buyout of smaller rival Goldcorp Inc, slated for next quarter.

Barrick’s bullish outlook came the same day it and Randgold reported results for the fourth quarter of 2018, their last earnings statements as separate companies.

Barrick lost a net $1.2 billion in the fourth quarter, or $1.02 per share, compared to a net loss of $314 million, or 27 cents, a year earlier.

Excluding impairment charges relating to the writedown in the value of a mine and other one-time items, Barrick earned 6 cents per share, beating the 5 cents a share estimate of analysts, according to IBES data from Refinitiv.

Gold production at Barrick fell about 6 percent to 1.3 million ounces during the fourth quarter through Dec. 31.

Separately, Randgold reported a fourth-quarter profit and 21 percent jump in gold production.

Barrick holds a majority stake in Acacia Mining, which is in the midst of a prolonged spat with Tanzania over a $190 billion tax bill that has severely limited the company’s operations in the East African nation.

Bristow said on Wednesday his goal was to find a solution that “helps all” while Barrick mulls all options, including selling the Acacia stake, which he said was far from the only potential outcome.

“We are making progress,” Bristow said in an interview.

Reporting by Ernest Scheyder; Editing by Bernadette Baum

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