UPDATE 2-Barrick posts loss on big impairment charge, cuts dividend
TORONTO, Aug 1 (Reuters) - Barrick Gold Corp reported stronger-than-expected quarterly results on Thursday, sending its shares up as much as 5.6 percent even as it recorded a massive $8.7 billion impairment charge and cut its dividend by 75 percent.
The world's largest gold producer also lowered its capital spending forecast for the year and cut its cost estimates for both copper and gold production.
Gold miners have announced billions in writedowns over the last two years as ill-advised deals, underperforming projects and plunging prices for the metal have wreaked havoc on their books.
In the second quarter alone, top Barrick rivals Goldcorp Inc , Newmont Mining Corp and Kinross Gold Corp have posted a combined $6 billion in impairment charges linked to the plunging gold price.
Barrick's charge is the largest so far. About $5.1 billion stems from the company's delayed Pascua-Lama gold mine in South America, with the rest linked to other assets and goodwill.
The Toronto-based company said in June that Pascua-Lama, which is on the border between Chile and Argentina, had been delayed until mid-2016. Regulators had halted work on the Chilean side until Barrick completes a new water management system.
The delay helped Barrick reduce capital spending for the year by about 20 percent, to between $4.5 billion to $5.0 billion, although it warned the cost of building Pascua-Lama would likely rise past its current budget of $8.5 billion.
To date, it has spent $5.4 billion on the gold-silver mine, which is its only new development. The cost update is expected in the third quarter.
Like its peers, Barrick is under intense pressure to reduce capital and operating costs as gold prices have fallen more than 20 percent so far this year, hitting a nearly three-year low around $1,180 an ounce in late June.
Barrick's average realized gold price fell 12 percent to $1,411 an ounce in the second quarter. That drop offset higher output and a 13 percent decline in all-in sustaining costs to $919 an ounce.
The all-in sustaining metric includes sustaining capital, exploration costs and general expenses to better show the true cost of mining an ounce of gold.
The miner now expects its all-in sustaining costs to average $900 to $975 per ounce for the year. Spot gold was trading around $1,324 an ounce on Thursday.
"The bulk of our expected 2013 gold production is at all-in sustaining costs well below current spot levels," Chief Executive Officer Jamie Sokalsky said in a statement. "For those operations that are not generating positive cash flow, we will change mine plans, suspend, close or divest them."
To that point, the company is reviewing its plans for a number of mines in North America, Australia and Africa, and may close its Pierina mine in Peru.
As a result of those moves and the delay at Pascua-Lama, Barrick said it no longer was targeting annual production of 8 million ounces of gold by 2016.
Shares of Barrick were up 3.8 percent at C$17.65 in morning trading after rising as high as C$17.95 soon after markets opened.
The company reported a loss of $8.56 billion, or $8.55 per share, in the second quarter, compared with a year-earlier profit of $787 million, or 79 cents per share.
Excluding one-time items like the impairment charge, earnings were 66 cents a share, above the analysts' average estimate of 56 cents, according to Thomson Reuters I/B/E/S.
Revenue fell 1.3 percent to $3.20 billion.
Gold sales climbed 7 percent to 1.8 million ounces in the second quarter, while copper sales rose 16 percent to 135 million pounds.
Barrick said the performance at its Lumwana copper project in Zambia had improved. It now expects copper costs to average $1.95 to $2.15 a pound in 2013, down from a previous estimate of $2.10 to $2.30.