Hedging helps Barrick’s earnings

While the price of gold averaged $380(US) per oz on COMEX during the nine months ended Sept 30, Barrick realized an average of $429 per oz for the gold it sold during the same period.

As a result, Barrick’s net income was up 26% to $23.7 million(US) or 39 cents per share in the first nine months of 1989 from $18.8 million or 31 cents per share at the same time last year.

Nine month revenues also increased by 46% to $142.3 million from $97.8 million in the same period in 1988.

The Toronto company’s share of gold production from seven U.S. and Canadian gold mines advanced to 331,377 oz in the first nine months of 1989, compared with 224,288 oz at the same time last year. Cash cost per oz dropped slightly to $286 from $298 in 1988.

“We are confident we will achieve our 1989 production and earnings targets,” said Robert Smith, Barrick’s president and chief operating officer. He is overseeing a $365(US) million development plan designed to increase gold output at the Goldstrike mine in Nevada to 900,000 oz in 1992 from 115,000 oz last year.

The company’s remaining 1989 gold production, estimated at around 110,000 oz, has been hedged at an average minimum price of $445 per oz. That would bring Barrick’s total output for 1989 to 440,000 oz, compared with 335,000 oz in 1988.

Meanwhile, third-quarter net income increased to $11.4 million or 18 cents per share from $7.4 million or 12 cents per share a year earlier.

During the quarter, Barrick reported $1.7 million in dividends. Included in that amount was a profit of $746,000 from the sale of its shares in British mining giant Consolidated Gold Fields PLC.

American Barrick shares were trading recently on The Toronto Stock Exchange at $29.75 in a 52-week range of $19-32.

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