Barrick Posts Hefty 4th-Quarter Loss on Copper Charge

Barrick Gold

Barrick Gold Corp. ABX.T -2.55% said Thursday it took a more than $4 billion impairment charge related mainly to its copper business unit, resulting in a hefty fourth-quarter loss.

The world’s largest gold producer said a new mining plan for its Lumwana copper mine in Zambia, which it took over in 2011 when it acquired Equinox Minerals, now calls for higher-than-planned operating and sustaining capital costs and reduced profitability. As a result of the impairment and higher-than-anticipated costs, it said it doesn’t plan to proceed with mine expansion plans that it was previously considering.

Barrick posted a loss of $3.06 billion, or $3.06 a share in its final quarter of 2012, compared with a profit of $959 million, or 96 cents, a year earlier.

On an adjusted basis, which excludes the $4.2 billion impairment charge, it earned $1.1 billion, or $1.11 a share, better than the $1.05 a share analysts polled by Thomson Reuters were expecting.

Revenue rose 11% to $4.19 billion, beating the Thomson Reuters mean estimate of $3.90 billion.

Gold production rose to 2.02 million ounces from 1.81 million a year earlier. Average realized gold prices were up 3% to $1,714 an ounce, while cash costs edged up 16% to $584 an ounce.

For the year as a whole, gold production totaled 7.4 million ounces, in line with the company’s projection for 7.3-7.5 million ounces.

Last quarter, Barrick announced extra delays and a cost increase of $500 million to its massive Pascua Lama mine on the border of Chile and Argentina, bringing the total expected cost of the project to around $8 billion to $8.5 billion. It said Thursday that expected total mine construction capital remains unchanged and first gold production continues to be targeted for the second half of 2014.

Barrick is guiding for 2013 gold production of 7.0-7.4 million ounces, with all-in sustaining cash costs projected at $1,000-$1,100 an ounce. Copper production in 2013 is expected to increase to 480-540 million pounds