The world’s two largest gold miners, Barrick Gold Corp. and Newmont Mining Corp,. each reported disappointing third-quarter results.
Canadian-based Barrick reported earnings and sales that missed analysts’ estimates after mining costs rose more than expected and production fell.
Newmont, the largest U.S. gold producer, reported third-quarter profits that missed analysts’ estimates after costs increased more than expected.
Barrick said in a statement that profit excluding impairment charges, foreign-exchange losses and other items was 85 cents a share, trailing the 99-cent average of 23 estimates compiled by Bloomberg. Sales declined to $3.44 billion from $3.97 billion, missing the $3.65 billion average of eight estimates. The shares fell as much as 7.6 percent.
Barrick earnings have disappointed for four consecutive quarters as it struggles to contain costs that are rising at a faster pace than the gold price. The company is in talks to sell African mines and is reviewing other assets. Barrick raised its cost estimate for the multibillion-dollar Pascua-Lama mine on the Chile-Argentina border for the second time this year, Bloomberg Businessweek reported.
Net income fell 55 percent to $618 million, or 62 cents a share, from $1.37 billion, or $1.36, a year earlier.
Third-quarter gold output declined to 55.3 t (1.78 million oz), compared with 60 t (1.93 million oz) a year earlier.
The cost to produce an ounce of gold rose to $19/g ($592/oz) from $14.56/g ($453/oz).
Barrick said 2012 gold production will be 227 t to 233 t (7.3 million to 7.5 million oz), compared with previous guidance of 227 t to 242 t (7.3 million to 7.8 million oz). It forecast total cash costs of $18.48 to $18.80/g ($575 to $585/oz), up from $17.63 to $18,48/g ($550 to $575/oz) previously.
Capital expenditure at Pascua-Lama will be “closer” to $8 billion to $8.5 billion, compared with a July estimate of $7.5 billion to $8 billion, Barrick said. First output at the project is expected in the second half of 2014, compared with an earlier view of mid-2014.
Barrick also said it’s cut or deferred about $1 billion of planned spending at its mines in 2013.
Net income for Newmont dropped 26 percent to $367 million, or 74 cents a share, from $493 million, or 98 cents, a year earlier, Newmont said in a statement. Basic earnings per share excluding costs related to restructuring and other one-time items were 86 cents, trailing the 89-cent average of 17 estimates compiled by Bloomberg. Sales fell 9.6 percent to $2.48 billion.
Newmont said costs applicable to sales were $22.28/g ($693/oz) per ounce of gold and $2.38/lb of copper, compared with $20/g ($622/oz) and $1.10/lb a year earlier.
Newmont, led by Chief Executive Officer Richard O’Brien, is among gold producers seeking to curb rising costs. The average cost per ounce of gold for large producers increased 18 percent in 2011, according to data compiled by Bloomberg Industries.
Newmont, which has mines in the Americas, the Asia-Pacific region and Africa, reported on Oct. 16 production of 38.5 t (1.24 million oz) of gold and 35 million lbs of copper in the third quarter. That compares with 40.7 t (1.31 million oz) and 58 million lbs a year earlier.
Gold, which has risen for 11 straight years, averaged $1,655.86 on the Comex in New York in the third quarter, 2.9 percent lower than a year earlier and 2.6 percent more than in the previous three months.