Barrick chairman sees gold price rising

American Barrick Resources (TSE) expects to produce 565,000 oz. of gold in 1990 at an average cost of US$220-222 per oz., says President and Chief Operating Officer Robert Smith. While Barrick was forced to write down the value of its stake in the Valdez Creek placer gold mine in Alaska, annual revenues were up 40% to US$206.1 millon in 1989 from US$147.5 million during the same period in 1988. Gold production from Barrick’s six North American gold mines increased to 467,837 oz. in 1989 from 341,000 in 1988.

In 1989 the company reported net income of US$35.8 million or 30 cents per share for the year ended Dec. 31, compared with net income of US$30.5 million or 25 cents per share in 1988. Per share earnings reflect a 2-for-1 stock split which became effective Dec. 13.

“Despite a weakening gold price throughout most of 1989, Barrick was able to build on its five previous years of consistent growth,” said Smith. “The company’s results reflect the performance of its operations throughout the year and particularly in the fourth quarter when income from operations increased more than 55% over the previous quarter,” Smith said.

Chairman Peter Munk, in a presentation to mining analysts in Toronto, said developments in Eastern Europe have “totally changed my view about developments of the gold price in the next year.” Munk said his previous pessimistic view on the future price of gold was now optimistic because he believes people in Europe will invest in gold as events increase a sense of “bewilderment, uncertainty.”

“Few revolutions of this magnitude have not ended up without trouble,” he said, comparing the dismantling of the Berlin Wall to events during the French and Russian revolutions.

Munk says he believes Soviet Premier Mikhail Gorbachev will be successful in leading the Soviet Union toward a free market system, but such a development will depend on “becoming part of the global economy” and that hinges on providing for the convertibility of the Soviet currency.

“There’s only one way to do that. It (the currency) must be tied to the one thing they’ve got that is accepted internationally — gold.”

If the Soviet currency is tied to gold, Munk said, the result would be similar to the events when the U.S. went off the gold standard — a dramatic increase in the price of gold.

Barrick’s fourth-quarter net income rose to US$12.1 million or 10 cents per share from US$11.7 million or 10 cents per share during the same period last year. Revenues for the final quarter of 1989 rose to US$63.7 million from US$49.7 million in the identical period of 1988.

During the 1989 fourth quarter, Barrick wrote off its US$11-million investment in Hayes Resources (TSE).

Thanks to its hedging program, Barrick realized an average price of US$436 per oz. on gold sales of 472,452 oz. in 1989, while the New York Commodities Exchange (COMEX) gold price averaged US$382 per oz.

Barrick says about 95% of its 1990 gold production has been hedged at an average minimum price of US$421 per oz., while it has retained 75% of the upside in the price of gold to US$507 per oz. and 36% over US$507 per oz.

Following the December stock split, Barrick shares are trading at US$20.25 in a 52-week range of US$11.25-21.38. American Barrick Resources(TSE)* Year ended Dec 31.19891988 Revenue (000s)$206,069$147,509 Net earnings (000s)35,76530,495 Net earnings

(per share)0.300.25 *US dollars