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Barrick Gold swings to $5.4 billion net loss on gold hedge charge

Published: 04:14 31 Oct 2009 AEDT

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Author: Dorothy Kosich

Eliminating Barrick's gold hedges necessitated a $5.7 billion charge, which sent the world's top gold miner's third-quarter financial results spiraling downward into a net loss of $5.4 billion or negative $6.07 per share.

Despite the write-down, Barrick remains on track with its full year 2009 production guidance of 7.2 million to 7.6 million ounces of gold at total cash costs of $450 to $475 per ounce, and copper production of 375 million to 400 million pounds at an average cash cost of $1.25 to $1.35 per pound.

Jamie Sokalsky, Barrick's CFO, told analysts Thursday the remaining gold hedges are 1.9 million ounces with a total liability of $2.8 billion.

For the first nine months of this year, Barrick reported a loss of $4.48 billion or negative $5.12 per share, compared to a net profit of $1.25 billion or $1.44/sh for the first nine months of 2008.

Meanwhile, Barrick officials updated analysts on the company's projects including the Cortez Hills project in Nevada, which is on track for first production in the first quarter of 2010. The project also remains in line with its $500 million capex budget.

Barrick CEO Aaron Regent discussed Barrick's proposed acquisition of 70% of the El Morro gold copper interest for $465 million in cash from Xstrata. El Morro is located between Barrick's Pascua Lama and Cerro Casale projects in the Atacama region of Chile. Total gold resources are estimated at 8.3 million ounces and total copper resources are believed to be 6.3 billion pounds.

The other 30% interest in El Morro is owned by New Gold, which Regent said, holds the right of first refusal to purchase Xstrata's interest and has until January 11th to exercise this right.

"The transaction is expected to close prior to June 30, 2010, after which we will focus on optimizing the current feasibility study and exploring the associated 800 square kilometer land position," he said. "In addition, we'll look for opportunities to cap the synergies between our other projects."

In response to an analyst's question, Regent said Barrick is still considering "opportunities in Canada" as its Hemlo mine winds down.

 

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