ELKO -- Reduced production at higher costs cut third-quarter profits at Barrick Gold Corp. by 40 per cent, but the company's president insisted one bad quarter won't derail ambitious growth plans.
"I don't underemphasize this past quarter by any means, but I don't overemphasize it either," president and CEO Randall Oliphant told a telephone news conference on Thursday.
"It's important to keep in perspective that in spite of the quarter we've just come through, our full year production is on target for 5.7 million ounces at an average cash cost of $178 per ounce. That's about three per cent higher than what we expected."
Toronto-based Barrick is Canada's largest gold producer and is No. 2 in Nevada behind Newmont Mining Corp.
The company said it had net earnings of $34 million, or 6 cents a share in the quarter ended Sept. 30, compared with $59 million, or 11 cents a share a year earlier.
Operating cash flow fell to $156 million from $181 million.
"Operating performance this quarter was disappointing. Various unrelated operating issues in the first half 2002 proved more stubborn than we expected," Oliphant said.
"Lower than anticipated graded recovery rates at certain properties resulted in lower production and higher costs."
Three-month production totalled 1.38 million ounces, down from 1.53 million a year earlier.
Barrick's average realized price was $342 an ounce, up from $316, as its hedging program beat the spot price of gold for the 59th straight quarter. Total production costs rose to $273 an ounce from $253.
As a result of reduced forward-selling premiums due to low interest rates and the positive outlook for gold prices, Barrick reduced its forward sales position by 1 million ounces during the quarter, to 16.9 million ounces.
The company announced in September a $2 million, four mine, five year growth plan, and Oliphant said it is on track, with feasibility studies completed during the quarter at a project in Argentina. The company is also developing new mines in Peru, Australia and along the Chilean-Argentinian border.
Barrick's shares closed up 18 cents at $14.78 Thursday on the New York Stock Exchange.