Barrick Gold Q1 profit US$514M as high prices offset lower production

By Romina Maurino, The Canadian Press

TORONTO - Greg Wilkins, on leave as chief executive of Barrick Gold Corp. (TSX: ABX.TO) for health reasons, still delivered an upbeat message to shareholders Tuesday, saying demand from emerging markets and lack of new mines will keep gold prices high.

The world's largest gold miner, which posted an increase in first-quarter profits partly because of gold prices which broke above US$1,000 an ounce for the first time during the quarter, said it didn't expect record prices to be a short-term phenomenon.

Wilkins said return to core inflation, a weakening U.S. collar "virtually no new discoveries" by miners despite big exploration expenses would keep supply and demand tight and boost gold prices.

As Barrick develops new projects, he said, it will be well-positioned to reap the benefits of high prices.

Wilkins spoke at the company's annual meeting in Toronto despite being temporarily replaced because of a serious illness. The company hasn't disclosed details.

Barrick founder Peter Munk said he will continue acting as chief executive while Wilkins remains on medical leave.

Earlier, Barrick reported a first-quarter profit of US$514 million, up from a year-ago net loss of $159 million as surging gold prices offset lower production.

Barrick said Tuesday it produced 1.7 million ounces in the January-March period, down from just over two million ounces a year earlier, but its realized price increased to US$925 an ounce from $386.

Total cash cost of production was $393 per ounce, up from $309.

Barrick's net profit rose to 59 cents per share, from a loss of 18 cents per share in the year-ago period. The latest quarter included $29 million of after-tax special items that reduced income by three cents per share.

Adjusting for one-time items, Barrick's earnings were 62 cents per share. Analysts surveyed by Thomson Financial were expecting 60 cents per share.

Barrick, reporting in U.S. dollars, said revenue rose to $1.96 billion from $1.09 billion in the same period last year.

It said production was weaker because of lower grades and throughput at some large operations, due to a combination of planned mine sequencing and operational disruptions.

"Improved performance is anticipated at a number of mines that experienced disruptions and as higher grades are accessed at Goldstrike starting in the second quarter," Barrick said.

The Toronto-based global miner maintained its full-year production guidance of 7.6 million to 8.1 million ounces of gold at cash costs of $390 to $415 per ounce, as well as 380 million to 400 million pounds of copper at cash costs of $1.15 to $1.25 per pound.

Its shares traded Tuesday at C$40.10, up 69 cents, at the Toronto Stock Exchange.