* Annual gold cost per ounce could overshoot forecast
* Barrick sticks to annual production, cost outlook
* Q2 copper production up 25% year-on-year
Aug 8 (Reuters) - Barrick Gold Corp
flagged on Monday that it might overshoot its gold production
cost forecast this year, though it stopped short of hiking its
cost guidance, with CEO Mark Bristow saying the path of
inflation was uncertain.
Barrick beat analysts' expectations with a nearly 19% rise
in second-quarter profit thanks to higher copper output even as
inflation drove production costs up for the world's
second-biggest gold miner. Its shares rose 2% at the open in
The company now expects to be "either at the top end or
slightly above" its all-in sustaining cost guidance range for
2022 of $1,040 to $1,120 per ounce of gold, given energy prices
have risen due to the war in Ukraine, it said.
"There's no way that anyone can categorically assess the
costs at the moment, because you don't know where it's going to
go," Bristow said. "The world is not in balance at the moment."
Mining companies have battled inflation this year as prices
for diesel, explosives, and cyanide surged. Barrick's rival
Newmont Corp hiked its annual cost forecast two weeks
ago, sending its shares down 12%.
Barrick's cost of production for the first half was $1,188
per ounce of gold, meaning it will have to bring costs down in
the second half in order to meet its forecast, something Bristow
said he expects.
"We can't go along and change the fuel price, but we are
forecasting an increase in production, so that drives the cost
down," he said.
Barrick is on track to meet annual copper and gold
production guidance, it said, announcing production of 120
million pounds of copper in the second quarter, up 25% from the
same period last year, while gold output rose marginally to
1.043 million ounces from 1.041 million ounces.
Net earnings stood at $488 million, or 27 cents per share,
for the quarter ended June 30, compared with $411 million, or 23
cents per share, a year earlier. Earnings and revenue for the
quarter beat analysts' estimates, according to Refinitiv data.
Barrick maintained its quarterly dividend of $0.20 per
share. "On an annualized basis, this implies a ~5.1% yield,
currently the highest in our coverage universe," Credit Suisse
Barrick's project capital expenditure jumped by 23% in the
first half of this year, mainly due to spending on the expansion
of the Pueblo Viejo mine in Dominican Republic, while free cash
flow fell by 24% from the year-ago period.
(Reporting by Arunima Kumar in Bengaluru; Editing by Shinjini
Ganguli, David Evans and Emelia Sithole-Matarise)