Expect a stormer from Barrick in H2

[HenryTo]

I guess gold bugs shouldn't expect any help from Barrick Gold:
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Expect a stormer from Barrick in H2
By: Gareth Tredway
Posted: '29-JUL-05 15:00' GMT © Mineweb 1997-2004

JOHANNESBURG (Mineweb.com) -- Barrick, the world’s number-three gold producer, said on Thursday that it will meet its 2005 production and costs targets, which implies that both line items will be much better in the second half of this year.

“The second half of 2005 is expected to have higher production and lower cash costs with Lagunas Norte in operation and a stronger operating performance expected at Goldstrike,” said the company in its second quarter results announcement.

The target set out in the beginning of the year was for 5.4 million to 5.5 million ounces of production at total cash costs of $220-$225 an ounce. So far the company has produced just less than 2.3 million ounces at total cash costs of $242 an ounce.

That means second-half production, using rough estimates, would have to be about 3.1 million ounces to reach the bottom range of the forecasts, at costs of around $213 an ounce.

Greg Wilkins, Barrick’s president and chief executive, says the company can now start to reap the benefits of its $1.2 billion growth strategy.

"Eighteen months ago we embarked on an aggressive growth program without comparison in the industry. As of today, two of the four new mines are in production, and we are substantially advanced on the other two," said Wilkins. "The Company is now entering the phase of reaping benefits and delivering value to our shareholders."

The timing has worked out well so far considering that Barrick sold its gold for an average of $426 an ounce in the half year, nearly $50 higher than in the first half of 2004.

When complete, the growth strategy would have added 40% to Barrick’s 2004 production of nearly 5 million ounces. If all goes right, the company will be producing 7 million ounces of gold a year from 2007.

The biggest of the growth projects are Lagunas Norte (Peru) and Veladero (Argentina) in South America. Combined, they hold nearly 22 million ounces of gold in reserve and will together produce 600,000 ounces of gold a year.

The company made a net-income of $53 million in the second-quarter, equal to $0.10 per share.