With bullion prices down sharply, Tanzanian gold miner African Barrick Gold (ABG) followed industry rivals and wrote down the value of its mines at the half-year stage - meaning a hefty $727m (£475m) hit. Accordingly, the group reported a $701m half-year net loss, against a net profit of $73.7m a year earlier, while operating cash flow slumped by 22 per cent to $99m.
Operationally, problems at the Bulyanhulu site reduced output at the mine by around a fifth. And while group throughput grew by 8 per cent, production was held back by a fall in grades. Nevertheless, the group produced 311,838 ounces during the first half and management reiterated its full-year target of 540,000-600,000 ounces with a cash cost range of $925-$975 an ounce sold.
The group has also initiated an operational review after a failed takeover by China National Gold in January - that has identified $185m of potential savings, over $100m of which will be realised in 2013. Management also intends to shorten the life of the Buzwagi mine to six-and-a-half years as a rationalisation measure in response to the falling gold price. Indeed, the second-quarter average realised gold price fell 14 per cent year-on-year to $1,366 an ounce.
Investec Securities expects adjusted full-year EPS of 7.2¢ (from: 25.3¢ in 2012).
| AFRICAN BARRICK GOLD (ABG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 122p | MARKET VALUE: | £500m | |
| TOUCH: | 121-122p | 12-MONTH HIGH: | 499p | LOW: 94p |
| DIVIDEND YIELD: | 7.1% | PE RATIO: | NA | |
| NET ASSET VALUE: | 489¢ | NET CASH: | $241m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 534 | 109 | 18.0 | 4.00 |
| 2013 | 500 | -898 | -171 | 1.00 |
| % change | -6 | - | - | -75 |
Ex-div: 28 Aug Payment: 23 Sep £1=$1.53 | ||||
