Barrick Gold's first-quarter profit jumps to US$224M from year-ago US$66M
18:22:28 EDT May 3, 2006
ROMINA MAURINO

TORONTO (CP) - Barrick Gold Corp.'s (TSX:ABX) first-quarter profit jumped to $224 million US from $66 million US in the same period a year ago, boosted by strong metal prices and gains made from the acquisition of Vancouver-based miner Placer Dome.

The gold company, which reports in U.S. dollars, said earnings translated to 29 cents per share, up from 12 cents per share in the same period last year, despite a $31-million hit due to special items. That beat one analyst's expectation of 26 cents per share, according to Thomson Financial.

"The strong metal prices have finally started to propel earnings in cash flow and we've seen the margin expansion that we've been waiting for," Greg Wilkins, president and CEO, said during a conference call with analysts.

"The acquisition of Placer Dome has strengthened our competitive advantage, as we have the strength, breadth and scale to capitalize on opportunities and deliver shareholder value."

Barrick finalized the purchase of Placer Dome during the quarter, in a deal that is expected to save $200 million annually starting in 2007.

The $12.1-billion acquisition was completed on March 15, and Barrick expects to close the deal to sell some of Placer's assets to Goldcorp Inc. (TSX:G) in May.

Wilkins said the company was happy with its choice to take over Placer, adding that its integration is on track and may show results even before 2007.

"We've already started eliminating redundancies and we anticipate really completing the integration process by the end of June," Wilkins said.

About 25 per cent of the total savings will come from administration and offices, another 25 per cent will come from exploration, he said.

Barrick will also cut costs on the operational and technical side, by combining shared infrastructure and supply-chain management.

"We are not (however) going to give up any opportunity for discoveries by virtue of the lower costs or the lower investment in exploration activities," Wilkins said.

Barrick also said it sees potential for growth particularly at the Cortez Hills and Bald Mountain projects in Nevada.

The company produced 1.96 million ounces of gold at total cash costs of $283 per ounce in the quarter, up from 1.14 million ounces at $241 per ounce the year before.

It also produced 72 million pounds of copper, at an average realized price of $2.31 per pound and total cash costs of 77 cents per pound.

Barrick reiterated its 2006 gold production forecast of 8.6 to 8.9 million ounces at $275 to $290 per ounce.

Full-year copper production is expected to total about 350 million pounds, at total cash costs of about 75 to 80 cents per pound.

The Toronto-based miner now has about 22,000 employees around the world.

Barrick shares closed down 20 cents to $34.40 Cdn Wednesday on the Toronto Stock Exchange before the results were announced, on trading of 3.2 million shares.