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Barrick Cuts Estimates on Mechanical Issue at Pueblo Viejo

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Barrick Gold CorporationABX said that due to a mechanical issue at the Pueblo Viejo mine in the Dominican Republic, production at the operation may be muted until mid-Jan 2016. Barrick holds a 60% interest in Pueblo Viejo with Goldcorp Inc. GG owning the remaining 40%.

Out of the three electronic motors at the mine, two underwent an unexpected failure and have been shipped to a specialized facility in the U.S. for repair. The cause of the failure is currently under investigation. The plant provides oxygen required for the autoclave processing facility that treats Pueblo Viejo's refractory ore.

The autoclave facility will operate at a reduced capacity till the damaged motors are repaired. Taking Pueblo Viejo's lower output into consideration, Barrick now expects to produce 6-6.15 million ounces of gold in 2015 at all-in sustaining costs of $830-$870 per ounce. Its prior forecast was 6.1-6.3 million ounces. The revised outlook implies that repairs can be completed with units back in service by mid January. While repairs are being carried out, Pueblo Viejo is bringing forward maintenance activities earlier scheduled for January to optimize the processing downtime.

During third-quarter 2015, production at Pueblo Viejo rose 2.4% to 172,000 ounces. Production was modestly below plan due to decreased gold grades and recoveries from a higher proportion of carbonaceous ore.

Barrick's third-quarter adjusted earnings per share (excluding one-time items) of 11 cents beat the Zacks Consensus Estimate of 6 cents. Earnings, however, declined from the year-ago quarter figure of 19 cents due to lower realized gold and copper prices .

On a reported basis, loss for the third quarter was of $264 million or 23 cents per share as against earnings of $125 million or 11 cents per share in the prior-year quarter.

Barrick met cost and production targets for the third quarter and also generated healthy free cash flow. However, Revenues fell around 11.8% year over year to $2,315 million in the reported quarter and missed the Zacks Consensus Estimate of $2,353 million.

Barrick currently carries a Zacks Rank #3 (Hold).

Some better-ranked mining companies include NovaGold Resources Inc. NG and Richmont Mines Inc. RIC . Both of them hold a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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