A bit late, Barrick aims for ‘full leverage’ to gold price

Gold has been going up for 10 years and they’re still short 2 million ounces.

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Barrick Gold Posts US$5.4 Billion Net loss on Windup of Gold Hedging Program

By Kristine Owram, The Canadian Press

TORONTO — Barrick Gold Corp. lost US$5.4 billion in the third quarter due to the windup of its gold hedging program, but the big miner said this move, as well as several low-cost projects set to come online in the next few years, position it to prosper from a rising gold price.

“Our production will be higher next year and at lower costs. We have a world-class pipeline of projects under construction and a number of additional projects in various phases of feasibility studies,” Barrick president and CEO Aaron Regent said on a conference call Thursday.

“Our company structure has been simplified with the elimination of the hedge book, we have a strong financial position to support our operations and projects, and finally we have a number of competitive advantages which we believe will continue to pay dividends in the future,” he added.

The market agreed, sending Barrick’s shares up by $2.62 or 7.1 per cent to $39.66 in Thursday trading on the Toronto Stock Exchange.

The Toronto-based gold miner, which reports in U.S. dollars, said its quarterly loss included a non-cash accounting charge of $5.7 billion related to its hedging program.

Adjusting for the accounting charge, Barrick had a profit of $473 million or 54 cents per share, up 17 per cent 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.

Regent said Barrick took several steps during the quarter to improve the company’s performance and strategic positioning going forward.

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 above US$1,000 an ounce.

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