July 29, 2010 / 1:09 PM / 8 years ago

WRAPUP 2-Barrick, Eldorado profits soar on record gold price

* Barrick Q2 EPS $0.79 vs $0.56 a yr earlier

* Barrick Q2 adjusted EPS $0.77 Vs $0.49 a yr earlier

* Barrick raises dividend by 20 pct

* Eldorado Q2 EPS $0.11 vs $0.07 yr ago (Adds details, analyst comments, graphic; in U.S. dollars, unless noted)

By Euan Rocha

TORONTO, July 29 (Reuters) - Barrick Gold (ABX.TO) said on Thursday its second-quarter profit rose 59 percent on record bullion prices, prompting the world’s largest miner of the precious metal to raise its dividend by 20 percent.

Eldorado (ELD.TO), its smaller Canadian rival, said its quarterly profit more than doubled, driven by higher sales volumes as well as the record prices.

Gold, which rose to a record of more than $1,260 an ounce in June, averaged nearly $1,200 in the quarter — up about 8 percent from the previous quarter and nearly 30 percent above year-earlier levels.

Although total cash costs per ounce increased, both miners benefited from increased production and higher realized gold prices in the quarter.

Barrick’s second-quarter gold production rose 4.2 percent to 1.9 million ounces, while Eldorado’s gold output almost doubled to 167,940 ounces, on increased production from its mines in China and Turkey.

Barrick’s net income in the quarter ended June 30 was $783 million, or 79 cents a share, compared with a year-earlier profit of $492 million, or 56 cents a share.

Excluding items, the company reported earnings of $759 million, or 77 cents a share, up from $431 million, or 49 cents a share.

Revenue rose 34 percent to $2.64 billion.

Analysts, on average, had forecast earnings of 72 cents a share on revenue of $2.61 billion, according to Thomson Reuters I/B/E/S.

Its share price rose 1.5 percent to $40.64 on the New York Stock Exchange on Thursday afternoon, while its shares in Toronto rose 1.2 percent to C$42.11.

Barrick’s board authorized a quarterly dividend of 12 cents a share, which translates into an annual dividend of 48 cents — 20 percent above the company’s current payout of 40 cents a share. The company is moving to a quarterly dividend structure from a semi-annual payout structure.

The company said it remains on track to meet its full-year production forecast of 7.6 million to 8 million ounces, at total cash costs of $425 to $455 an ounce.

“We continued to advance our project pipeline in line with our plans,” said Chief Executive Aaron Regent. “Cortez Hills has been completed and is performing exceptionally well and the construction of Pueblo Viejo and Pascua-Lama continue to move forward.”

The $500 million Cortez Hills mine is an expansion of Barrick’s existing Cortez mine. It is one of the company’s key growth projects, along with Pueblo Viejo in the Dominican Republic and Pascua-Lama on the Argentina-Chile border.

J.P.Morgan analyst John Bridges believes that Cortez is poised to shine for Barrick this year.

“Cortez Hills is one of the best new gold discoveries of the last 50 years. It’s taken a long time to develop but is up and running. It looks likely to beat Barrick’s original 1 million ounce target for the year,” Bridges said in a note to clients.

(Sector Comparison: link.reuters.com/wep98m)


Eldorado’s second-quarter net income rose to $60.5 million, or 11 cents a share, from $25.9 million, or 7 cents, a year earlier. The Vancouver-based miner’s revenue jumped 158 percent to $207.8 million.

Analysts, on average, had forecast earnings of 8 cents a share on revenue of $185.2 million, according to Thomson Reuters I/B/E/S.

Eldorado’s shares were up almost 2 percent in Toronto and New York.

The company produced 167,940 ounces of gold at an average cost of $357 an ounce, compared with 84,572 ounces at an average cost of $303 a year earlier.

It sold 172,826 ounces of gold, up 99 percent from a year ago, at a realized average price of $1,195 an ounce.

“We look to Eldorado Gold to become one of the growth names in the Tier II producer space over the coming few years, as gold output is forecast to rise some 50 percent this year, another 50 percent in 2011 and approach 1 million ounces per annum by 2013,” RBC analyst Michael Curran said in a note to clients.

Earlier in the week, Goldcorp Inc (G.TO) and Agnico-Eagle (AEM.TO) reported bumper profits, helped by record bullion prices and increased gold production. [ID:nN28234234]

$1=$1.04 Canadian Additional reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Frank McGurty and Rob Wilson

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