Thursday, February 16, 2012

Barrick (ABX) Misses on Rising Costs

The ongoing rise in cost continues to weigh on the mining sector, as evidenced again by the performance of Barrick Gold (NYSE:ABX) in the latest quarter, where it missed its EPS estimates by a huge 10 cents a share.

For the fourth quarter ended December 31, Barrick earned $1.17 billion, or $1.17 a share. Analysts had been looking for $1.27 a share.

The rise in gold prices during the quarter wasn't enough to offset the soaring cost of doing business, although they did boost revenue to a huge $3.79 billion or 26 percent increase. Gold price increases accounted for 22 percent of the gains.

Net income fell from $961 million, or 96 cents a share last year to $959 million, or 96 cents a share in the latest quarter.

Fourth quarter gold production came to 1.81 million ounces, at $505.00 an ounce. For all of 2011 gold production reached 7.68 million ounces, at an average cost of $460.00 an ounce.

Gold production estimates for 2012 are from 7.3 million to 7.8 million ounces at a cah cost range of $520 to $560 an ounce. Barrick said the higher costs in production are the consequences of rising labor costs and inflation, as well as a change in the production mix.

The most recent analyst activity on Barrick was a downgraded from Canaccord Genuity on January 30, where they were taken from a "Buy" rating to a "Hold" rating, with a price target of $57.50 on the gold mining giant.

Barrick was trading at $47.65, up $0.22, or 0.46 percent, as of 12:45 PM EST.

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