The fourth-quarter output on an annualized basis would put the company on track to produce 723,000oz this year if last quarter's output were to be repeated throughout 2013.
LONDON (BullionStreet): Tanzania's largest gold miner, African Barrick Gold PLC has announced that it plans to tackle costs in order to generate more cash flow after reporting higher gold output in the fourth quarter.
African Barrick Gold has suffered from three consecutive years of declining gold output but expects to turn around its operations after launching an operational review earlier this year aimed at creating an organizational structure more suited to its asset base, among other things.
The operational review was announced after the failure of talks that could have seen China National Gold Group Corporation purchase a controlling stake in African Barrick Gold from Barrick Gold Corp ABX -1.30%.
ABG produced 180,684oz of gold in the fourth quarter, up 13% on the year and 22% on the quarter due to improved throughput at its Buzwagi mine and higher quality ore mined at both its North Mara mine and Buzwagi, which partially offset lower ore grades at Bulyanhulu among other things. The expected fourth-quarter output rise, however, wasn't enough to offset a 9% drop in full-year gold output to 626,212oz for the year ending December 31. The figure was in line with the company's October revised guidance that output would be 5% to 10% below its full-year target range of 675,000oz to 725,000oz.
The fourth-quarter output on an annualized basis would put the company on track to produce 723,000oz this year if last quarter's output were to be repeated throughout 2013. The company, however, said it perferred to be more conservative.
The fourth-quarter figure "shows what we can do when a few things go our way," said Greg Hawkins, African Barrick Gold Chief Executive.
But "we're cautious. Things don't always go as you like. (And) remember, Buzwagi was in a good grade patch," he added.
Hawkins said the focus for the company would be to generate more cash flow from its production base in 2013. He expects to extract cost savings and operational improvements from a review announced earlier this year.
ABG said it expects its cash cost per ounce of gold sold to be at the top of its guided range of $900/oz to $950/oz, up from cash costs of $692/oz in 2011.
Hawkins said ABG's gold output should start to rise in 2014 when it expects to commission its Bulyanhulu CIL expansion project, which will boost production capacity by 50,000oz. Production capacity should then rise another 50,000oz in 2015 when the company commissions addditional output from its Bulyanhulu Upper East project, which is due to be put to the board for approval this year, he said.