Tanzania-focused miner African Barrick Gold (ABG) will concentrate on cutting costs through 2013 in response to a sharp contraction in full-year earnings, and the initial findings of an operational review implemented in the wake of last month's aborted takeover talks with China National Gold.
A renewed focus on costs is understandable given that the group's cash profits - at $331m (£211m) - were $23m adrift of analyst estimates and 39 per cent down on 2011. The decline was primarily due to a 9 per cent reduction in output to 626,212 ounces (oz), combined with a 37 per cent hike in cash costs to $949 an oz. ABG is targeting production of 540,000-600,000oz of gold in 2013, with total cash costs, including royalties, of $925-$975 an oz. One of the key objectives of the review is to optimise operating cash flow, which almost halved to $258m last year.
Admittedly, ABG did reveal a marginal year-on-year uplift in fourth-quarter revenues, together with a 13 per cent rise in production, but the group still recorded a net loss for the quarter after booking a $44.5m impairment relating to the planned closure of the Tulawaka mine.
Ahead of these results GMP Securities cut its 2013 EPS estimate from 50¢ to 29¢.
| AFRICAN BARRICK GOLD (ABG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 341p | MARKET VALUE: | £1.4bn | |
| TOUCH: | 340-342p | 12-MONTH HIGH: | 523p | LOW: 301p |
| DIVIDEND YIELD: | 3.0% | PE RATIO: | 37 | |
| NET ASSET VALUE: | 671¢ | NET CASH: | $401m | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2008 | 0.54 | -157 | na | nil |
| 2009 | 0.71 | 150 | 14.3 | nil |
| 2010 | 0.98 | 309 | 52.2 | 5.3 |
| 2011 | 1.22 | 403 | 67.0 | 16.3 |
| 2012 | 1.09 | 119 | 14.5 | 16.3 |
| % change | -11 | -70 | -78 | - |
Ex-div: 1 May Payment: 24 May £1 = $1.57 | ||||
