Toronto — The Canadian Press Published on Thursday, Oct. 29, 2009 7:27AM EDT Last updated on Thursday, Oct. 29, 2009 8:11AM EDT
Barrick Gold Corp. ABX-T says it lost $5.4-billion in the third quarter due to the windup of its gold hedging program, which had been designed to protect the company's bottom line from the possibility of lower bullion prices.
The Toronto-based company, which reports in U.S. dollars, says the loss included a non-cash accounting charge of $5.7-billion related to the hedging program.
Adjusting for the accounting charge, Barrick had a profit of $473-million or 54 cents per share, up from $404-million or 46 cents per share last year.
Barrick is the world's biggest gold company, with third-quarter sales of nearly $2.1-billion in the third quarter – up from just under $1.9-billion last year.
“Our operations delivered another strong quarter, positioning us well to meet our production and cost targets for the year,” Aaron Regent, Barrick's president and chief executive officer, said in a statement.
He said Barrick took a “number of important steps during the quarter to enhance our strategic positioning in what we expect to be a strong gold price environment.”
That included plans to eliminate its gold hedging program within 12 months.
The hedging program, which was designed to lock-in prices for future sales to provide insurance against a drop in gold prices, has become a drag for Barrick.
The hedges prevented Barrick from taking full advantage of the rising price of bullion, which has recently been trading about $1,000 an ounce.
Barrick said Thursday that its average realized gold price for the quarter was $971 per ounce, or $11 higher than the average spot price of $960 per ounce.
It produced 1.90 million ounces of gold at total cash costs of $456 per ounce, or net cash costs of $371 per ounce after applying credits from sales of non-gold metals such as copper and silver that are mined along with the gold.
Revenue fell short of analyst expectations but Barrick's adjusted earnings were above a consensus estimate compiled by Thomson Reuters.
On average, analysts had called for $2.147-billion in revenue and 47 cents per share before unusual items such as the charge for the hedging program.
Barrick said it is on track with its full-year production guidance of 7.2-7.6 million ounces of gold at total cash costs of $450-$475 per ounce or net cash costs of $360-$385 per ounce.
Barrick shares closed at $37.04 Wednesday at the Toronto Stock Exchange.
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