Valdez Creek mine closure affects Am. Barrick income

While the price of gold averaged $385(US) an oz on the New York Commodities Exchange during the first six months of 1989, Barrick realized an average $427(US) per oz on the 216,491 oz it produced in that period.

As a result, net income for six months ended June 30 increased to $12.3 million(US) or 21 cents per share compared to $11.3 million or 19 cents per share at the same time last year.

However, Barrick’s second quarter net income dropped to $5.1 million or 9 cents per share from $6.8 million or 11 cents per share from the equivalent period in 1988.

According to President Robert Smith, the drop in second quarter net income was attributable to a shut down at the Valdez Creek gold mine in Alaska and a $3.3-million loss on the sale of Barrick’s investment in LAC Minerals (TSE) of Toronto.

Barrick was forced to swallow a $3.2-million writedown on the value of its 23% stake in the Valdez Creek placer gold operation which has been closed temporarily until the price of gold recovers to a level that would make the mine economic. The remaining interest at Valdez Creek is held by Camindex Mines (TSE) 51% and Cambior Inc. (TSE) 25.8%.

In the second quarter, Barrick hedged its investment in LAC by selling one million LAC shares and purchasing 1.28 million shares of Toronto-based Corona Corp. (TSE). Barrick also realized a $2.9-million profit on its 3.4 million shareholding in British mining giant Consolidated Gold Fields.

According to Jeremy Garbutt, Barrick’s chief financial officer, a $4.5-million profit will be realized when Barrick’s entire interest in ConsGold is sold later this year.

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