The world's biggest gold producer,
Barrick Gold Corporation
) announced updates on the Pascua-Lama project in Chile and
Argentina. As per the company, construction of the Pascua-Lama
mine in the Andes is delayed due to the falling gold prices,
rising costs and challenging market conditions. Barrick now
expects first production from the Pascua-Lama mine by mid-2016
compared with the previous schedule of the second half of
In May 2013, Barrick received a resolution from Chile's
Superintendence of the Environment (SMA) that imposed a fine of
about $16 million on the gold miner for not meeting the
environmental control measures at its Pascua-Lama project.
Barrick did not abide by the environmental standards, which
eventually led the Chilean government to halt the construction on
the Chilean side of the project. Barrick stated that it has
submitted a plan, subject to an approval by regulators in Chile,
to construct a water management system in compliance with permit
Barrick believes that there will be a significant deferral of
planned capital spending in 2013 and 2014 due to the
re-sequencing of the project. Barrick expects to reduce capital
expenditures at Pascua-Lama in 2013 and 2014 by $1.5-$1.8
billion. The company also expects to reduce staff levels at the
Barrick stated that the delay would result in an after-tax
asset impairment charge of approximately $4.5-$5.5 billion in the
second quarter. Moreover, it was reviewing the price of its other
assets, including goodwill for possible impairment charges in the
The Pascua-Lama project is expected to be one of the world's
largest and lowest cost mines in the coming years. The mine's
expected annual gold production in the first five years is
800,000 to 850,000 ounces.
In Apr 2013, Barrick released its first quarter 2013 results.
The company's adjusted earnings (excluding one-time items) fell
to 92 cents per share in the quarter from $1.10 per share in the
year-ago quarter, but were ahead of the Zacks Consensus Estimate
of 86 cents.
On a reported basis, net earnings came in at $847 million or
85 cents per share, down approximately 18% from $1.04 billion or
$1.04 per share recorded in the year-ago quarter. Lower gold and
copper prices and reduced sales volumes weighed on the bottom
Revenues fell 5.7% year over year to $3,437 million in the
reported quarter and missed the Zacks Consensus Estimate of
$3,649 million. Average realized price of gold decreased 3.7%
year over year to $1,629 per ounce.
Total cash costs increased 3.9% to $561 per ounce while all in
sustaining costs crept up 1.1% to $919 per ounce in the reported
quarter. Barrick currently retains a Zacks Rank #3 (Hold).
Other companies in the mining industry with favorable Zacks
Brigus Gold Corp.
Claude Resources, Inc.
Lake Shore Gold Corp.
). While Brigus Gold retains a Zacks Rank #1 (Strong Buy), both
Claude Resources and Lake Shore retain a Zacks Rank #2 (Buy).
BARRICK GOLD CP (ABX): Free Stock Analysis
CLAUDE RSRCS (CGR): Free Stock Analysis
LAKE SHORE GOLD (LSG): Free Stock Analysis
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