February 16, 2012 / 12:22 PM / 6 years ago

Barrick Gold profit disappoints as costs weigh

TORONTO (Reuters) - A 15 percent increase in quarterly operating profit at Barrick Gold (ABX.TO), the world's largest gold miner, fell short of expectations and its shares slid more than 2 percent on Thursday.

Barrick's results showed gains from a higher gold price, but increased gold and copper production costs prevented it performing as well as the market had forecast, analysts said.

Barrick's shares fell $1.02 to $46.41 in early trading on the New York Stock Exchange, while its Toronto-listed stock fell C$1.11 to C$46.43.

The Toronto-based gold miner said it was able to replace proven and probable reserves in 2011, keeping them just shy of the 140 million ounce mark, the largest gold reserve base in the world.

Barrick said it is continuing to enlarge its resources through new discoveries in Nevada: Goldrush and Red Hill. It has confirmed that the two deposits - now named the Goldrush complex - are a part of one large deposit with mineralization stretching over five kilometers (3 miles).

"Our growing high grade gold discovery in Nevada, Red Hill-Goldrush, clearly demonstrates the value that a focused and disciplined exploration program can create," Chief Executive Aaron Regent said in a statement.

The company also said it continues to advance its Pueblo Viejo project in the Dominican Republic and its Pascua-Lama project on the border of Chile and Argentina, with output set to begin in 2012 and 2013, respectively.

COSTS WEIGH

The company earned $1.17 billion, or $1.17 a share, in the fourth quarter ended December 31. Those figures exclude an impairment charge on certain redundant power assets, an investment portfolio write-down and certain other one-time items. Analysts, on average, had forecast earnings of $1.28 a share, according to Thomson Reuters I/B/E/S.

Net income in the quarter was $959 million, or 96 cents a share, down slightly from $961 million, or 96 cents, a year earlier.

Revenue rose 26 percent to $3.79 billion, largely driven by a 22 percent jump in Barrick's average realized gold price in the quarter.

Gold production reached 1.81 million ounces at total cash costs of $505 an ounce. Full-year production came in at 7.68 million ounces, at total cash costs of $460 an ounce.

The company expects 2012 gold production of 7.3 million to 7.8 million ounces at a total cash cost of $520 to $560 an ounce. The higher projected production costs reflect a change in the production mix, along with higher labor and other inflationary costs.

On Wednesday, Canada's No. 2 gold miner Goldcorp (G.TO) reported a 23 percent increase in its operating profit.

Reporting By Euan Rocha; Editing by Frank McGurty and Peter Galloway

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