HomeEast AfricaABG reports 17% fall in gold output

ABG reports 17% fall in gold output

BGA’s Buzwagi
gold mine in Tanzania
London, England — 19 April 2012 – African Barrick Gold (ABG) “’ Africa’s fifth-largest gold producer “’ reported a 17% fall in gold production in the first quarter of 2010, partly due to lower ore quality at its Buzwagi mine in Tanzania, prompting fears that the company might hit the low end of its full-year production outlook.

Reuters reports that shares of the Tanzania-focused company, which reiterated its full-year production forecast of 675,000 to 725,000oz, fell 7%.

“If they do achieve their guidance it will be at the lower end of the range,” said Liberum Capital analyst Kate Craig. “The reason they could miss their production guidance is they still don’t have their waste dump permits at the North Mara mine, and at Buzwagi they’ve got further geological challenges impacting their recovery,” she added.

ABG, a unit of the world’s largest gold miner, Barrick Gold Corporation, produced 144,643oz of attributable gold in the quarter, down from 173,907oz from January to March last year.

“We had expected ABG to deliver a weak first-quarter result and it did not disappoint,” Investec’s Hunter Hillcoat said. “The first-quarter performance suggested full-year production could be at the low end of the range, from my previous expectation of just above the mid-range,” Hillcoat added.

The company said it continued to expect a step-up in production levels during the second half.

“Our focus remains on the waste stripping programme at North Mara, ensuring that we manage the power situation in Tanzania,” chief executive Greg Hawkins said in a statement.

Apart from lowered production, the gold miner is also battling rising expenses. Cash costs rose 41% in the quarter to US$925/oz, far above the company’s full-year estimate of US$790 to US$860/oz. Costs jumped 22% last year on the back of rising inflation, and increased use of generator power to keep mines working in Tanzania, which suffers from erratic power supply.

Source: Reuters. For more information, click here.