During its conference call with analysts, Barrick Gold (NYSE:ABX) said its capital expenditures remain a challenge, as its project pipeline costs for its Cerro Casale project in Chile, Pueblo Viejo JV in the Dominican Republican, and the Pascua-Lama mine on the Chile-Argentina border have all been raised.
Also noted by Barrick CEO Aaron Regent is the increase in costs for labor, consumables and design adjustments at some of its major projects.
"Operationally and financially, we had a solid quarter but the increased pressure on the capital costs for projects has been a challenge," said Regent on the conference call.
Barrick has completed its $7.3 billion acquisition of Equinox Minerals in July, which should provide an additional cash flow source which will be reinvested in the gold business of the company. The Lumwana mine should produce about 300 million pounds of copper annually.
As for gold production in the second quarter, it rose from 1,944,000 ounces in 2010 to 1,977,000 ounces this year. The company said it should reach its production goal guidance of 7.6 million to 8 million ounces in 2011. Barrick's five-year goal is to reach 9 million ounces a year in gold production.
On the cost side, the company wants to cut is cash costs by 20 percent during that five-year period.
Earnings for the second quarter jumped 35 percent from $859 million, or 84 cents a share in the second quarter of 2010 to $1.16 billion, or $1.16 billion a share in the second quarter of 2011.
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