* Q1 EPS $0.76 vs $0.42 a year earlier
* Profit driven by high gold price, lower costs
* Stock gains 2.6 percent in Toronto
* Hedge-free Barrick sees gains from rising gold price (Adds details from annual meeting, background, stock price; in U.S. dollars unless noted)
By Cameron French
TORONTO, April 28 (Reuters) - Barrick Gold's (ABX.TO) first-quarter profit more than doubled to a record high, the company reported on Wednesday, as the now hedge-free miner benefited from stronger gold prices, higher production and declining costs.
Barrick, the world's No. 1 gold producer spent around $5 billion and took a full-year loss last year to exit its hedgebook. The hedges -- or forward sales at lower gold prices -- had limited its ability to profit from rising bullion prices and had deterred investors from its stock.
Free of the hedges now, Barrick expects to benefit from full exposure to a rising gold price, while a new generation of large-scale mines promises to raise production, and at lower extraction costs.
"Combined with higher gold and copper prices, our margins will continue to expand, with a corresponding rise in our earnings and cash flow," Chief Executive Aaron Regent told the company's annual shareholder meeting in Toronto.
Quarterly net profit rose to $758 million, or 76 cents a share, from $371 million, or 42 cents a share.
Stripping out one-time items, earnings per share totaled 75 cents, which topped analysts' estimates of 63 cents.
The company's shares -- which generally trade at a lower valuations than Barrick's peers -- rose 2.6 percent to C$42.51 on the Toronto Stock Exchange.
"The (profit) was a lot better than what I was looking for," said Kerry Smith, an analyst at Haywood Securities.
"The copper production was up over what I was expecting, the gold production was a little better, and they got the costs down."
Revenue rose to $2.56 billion from $1.78 billion as realized gold prices jumped to $1,114 an ounce from $915, while total cash costs fell 8.7 percent to $442 an ounce.
While still off the record levels hit last November, gold prices have been rising of late as the expanding debt crisis in Europe has put a spotlight on the metal's safe-haven appeal
Gold XAU= was at $1.169 on Wednesday, as ratings agency Standard & Poor's downgraded Spain's debt one day after doing the same to Greece and Portugal.
That uncertainty, combined with a trend of declining global gold output, inflationary signals and recent central bank purchases of gold, provide a case to believe the precious metal should continue to rise, Barrick says.
"The global feeling is that the lack of confidence in governments that issue paper currency is declining by the hour and by the day," Barrick's chairman and founder, Peter Munk, said at the meeting.
Production rose 18.7 percent to 2.08 million ounces from 1.76 million ounces, helped by a strong early output from the company's Cortez Hills project in Nevada.
Cortez Hills, along with the Pueblo Viejo project in Dominican Republic and Pascua Lama in Argentina, are expected to keep Barrick's extraction costs low while reversing a recent trend of declining production.
But while all three are progressing on track and on budget, the new operations have not been without some concerns.
A U.S. appeals court ruled in December that Cortez Hills required additional environmental analysis. However, a court ruling earlier this month allows Barrick to continue to mine there while environmental assessments proceed.
Barrick said it expects a report on the supplemental assessment to be issued by year-end.
At the $3 billion Pueblo Viejo project, civic and environmental groups have complained about the terms of Barrick's government contract and the possible impact the mine will on the environment.
Asked if he was worried whether the Dominican government would try to change the terms of the contract, Regent said he believed the issue has been politicized ahead of legislative elections due to take place next month.
"I think its something we need to be mindful of, but I wouldn't say we have great concerns," he told reporters.
Barrick, which has a cash position of $3.5 billion, said it is on track to produce 7.6 million to 8 million ounces of gold this year at a cash cost in the range of $425 to $455 per ounce.
$1=$1.01 Canadian Additional reporting by Euan Rocha; editing by Rob Wilson