Barrick shares tumble as weaker gold production dents profit

Barrick Gold Corp (ABX.TO), shares hit their lowest level since March 2020 on Thursday after the world’s second-biggest gold miner reported a 30.1% drop in third-quarter profit due to weak production and higher costs.

The Toronto-based miner said it now expects to exceed its previous gold cost guidance for the year, as all-in sustaining costs (AISC), an industry metric that reflects total expenses, rose to $1,269 per ounce, a 22.7% increase on the September quarter last year.

Toronto-listed shares were down 6.9% to 18.26 Canadian dollars, on track for their biggest one-day drop in two years.

The cost increase was largely down to a 9% fall in gold production from 1.09 million ounces to 988,000 ounces, CEO Mark Bristow said.

“Of course we’ve got cost pressures everywhere,” Bristow said, adding that the worst-affected mines were Carlin and Cortez in Nevada, and Veladero in Argentina.

All-in sustaining costs for copper also rose, to $3.13 per pound from $2.60 per pound. Copper production increased, however, to 123 million pounds from 100 million pounds.

Barrick remains on track to achieve its 2022 production guidance, Bristow said in a statement. The miner however said production at both Turquoise Ridge in Nevada and Hemlo in Canada is expected to be below the 2022 guidance range.

Barrick’s net earnings fell to $241 million, or 14 cents per share, in the quarter ended Sept. 30, from $347 million, or 20 cents per share, a year earlier.

Gold prices declined 8% during the third quarter as global central banks raised interest rates to battle surging inflation. Barrick’s average realised price for gold fell 2.8% to $1,722 per ounce from a year earlier, the company said.

Larger rival Newmont Corp (NEM.N) on Tuesday reported a 56% drop in quarterly profit, largely due to lower gold sales volumes and higher labor, energy and raw materials costs.