Barrick Gold Corp.’s (ABX) adjusted net earnings (excluding one time items) rose 8% to $1.09 per share in the first quarter of 2012 compared with $1.01 in the prior-year quarter. The results came in line with the Zacks Consensus Estimate. Earnings were driven by higher average realized gold price. Profit, as reported, rose roughly 3% year over year to $1.03 billion (or $1.03 a share).
Revenue
Revenues came in at $3,644 million, up 18% from $3,087 million in the year ago quarter, missing the Zacks Consensus Estimate of $3,758 million. The company produced 1.88 million ounces of gold in the quarter versus 1.96 million ounces in the year-ago period.
Copper production in the quarter amounted to 117 million pounds, a 56% jump from the year ago production of 75 million pounds. Total gold cash costs jumped 24.7% to $545 per ounce of gold, while total cash cost for copper increased to $2.08 per pound from $1.25 per pound in the prior-year quarter.
Regional Results
North America: North America region produced 0.89 million ounces of gold at total cash costs of $485 per ounce compared with 0.86 million ounces at total cash costs of $396 per ounce a year ago. Strong performance by Cortez mine due to higher than budgeted grades led to the growth in production.
Production at Goldstrike was, however, hampered by maintenance activities and construction at the autoclaves. For 2012, production for the North America region is expected to be in the range of 3.425-3.60 million ounces at total cash costs of $475-$525 per ounce.
South America: This business region’s production in the quarter was 0.45 million ounces at total cash costs of $421 per ounce compared with 0.42 million ounces at cash costs of 340 per ounce. Production from South America in 2012 is expected to be in the range of 1.55-1.7 million ounces at total cash costs of $430-$480 per ounce.
AustraliaPacific: This business region produced 0.43 million ounces in the quarter, compared with 0.46 million ounces in the year-ago quarter. Total cash costs were $748 per ounce in the reported quarter compared with $585 per ounce in the year-ago quarter. Australia Pacific is forecast to produce 1.80-1.95 million ounces at total cash costs of $700-$750 per ounce in 2012.
African Barrick Gold plc. (ABG): Attributable production from ABG in the first quarter of 2012 was 0.11 million ounces at total cash costs of $925 per ounce compared with 0.13 million ounces at total cash costs of $658 per ounce in the prior-year quarter. Barrick Gold expects to produce 0.5-0.535 million ounces at total cash costs of $790-$860 per ounce in 2012.
Dividend
The company declared a 33% hike in its quarterly dividend to 20 cents per share, up from the previous payout of 15 cents. The increase was driven by strong earnings and operating cash flows.
Financial Position
Cash and cash equivalents stood at $2,665 million at the end of March 31, 2012, compared with $2,745 million at the end of March 31, 2011. In the first quarter of 2012, operating cash flows decreased 11.6% to $1,272 million.
Outlook
Barrick Gold maintained its 2012 forecast of 7.3 -7.8 million ounces of gold and 550 -600 million pounds of copper. Total cash costs for 2012 for gold are expected to be in the range of $520-$560 per ounce and net cash costs are expected to be within the band of $400-$450 per ounce. The company expects copper cash costs of $1.90-$2.20 per pound for 2012.
Barrick Gold increased its exploration budget to $450-$490 million from the prior year actual expenditure of $350 million as a result of exploration success in 2011.
The company remains on track to advance construction at Pueblo Viejo and Pascua-Lama, with first production expected in mid-2012 and mid-2013, respectively. The two projects in combination are expected to generate average annual production of 1.5 million ounces with total average annual EBITDA of approximately $2.5 billion in their first full five years.
We currently have a long-term Neutral recommendation on Barrick Gold. The company, which competes with AngloGold Ashanti Ltd. (AU) and Newmont Mining Corp. (NEM), maintains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) Hold rating.
BARRICK GOLD CP (ABX): Free Stock Analysis Report
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NEWMONT MINING (NEM): Free Stock Analysis Report
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