UPDATE 2-African Barrick Gold Q3 profit down on weak output

* Net income down 8 percent to $39.9 million

* Q3 gold production down to 164,996 ozs, vs 213,819 ozs

* Average realised prices up 29 percent to $1,233/ounce

* Cash costs jump 32 percent to $615 per ounce

* Shares up 0.2 percent

(Adds interview with CEO, share price, analyst comment)

By Julie Crust

LONDON, Oct 22 (BestGrowthStock) – African Barrick Gold’s (ABGL.L: )
third-quarter net income fell 8 percent as weaker than expected
gold production outweighed the effect of higher gold prices for
the Tanzanian miner.

Net income at the unit of the world’s biggest gold producer,
Barrick Gold Corp (ABX.TO: ), fell to $39.9 million as gold output
declined 23 percent to 164,996 ounces. Numis Securities had
expected around 178,000 ounces.

Earlier this month, African Barrick said a fuel theft at its
new Buzwagi mine would cut overall production for the third
quarter by 10,000 ounces and annual output by 30,000 ounces due
to delays in accessing high-grade areas. [ID:nLDE69D084]

“We will overcome the Buzwagi issues this year. They are a
temporary setback,” chief executive Greg Hawkins told Reuters.
“We have taken some pretty tough decisions with regards to the
site at Buzwagi and we have also introduced some pretty strong

African Barrick now expects to produce about 716,000 ounces
this year, the same as 2009. “We are back in mining the high
grade now. That is just starting to be fed into the process
plant,” said Hawkins. He noted the higher grades were around 3
grammes a tonne versus 1 gramme at low grades.

Shares in the miner are down about 4 percent since listing
in March at 575 pence, after it cut production targets twice
this year due to the performance of Buzwagi.

At 0915 GMT, the shares were up 0.2 percent at 551 pence.

“We have a high degree of confidence over the next few
months and into 2011,” said Hawkins. “We have obviously taken a
short-term hit in dealing with some issues this year but they
are contained within 2010.”

African Barrick will release guidance for 2011 output, which
it expected to be boosted by higher production from Buzwagi,
alongside full-year results in February.

RBC Capital Markets expected the miner’s gold production to
rise to about 791,000 ounces next year.

Its cash costs in the third quarter jumped 32 percent to
$615 an ounce, primarily due to additional costs at Buzwagi,
although the average price received for its gold was $1,233.

“Based on generally positive results at Bulyanhulu and North
Mara (mines), it appears the increase in cost guidance is likely
to be a temporary,” Canaccord Genuity said in a note.

African Barrick expects cash costs for 2010 to be around the
year-to-date figure of $556 per ounce compared with the guidance
range of $500-550.

Spot gold prices (XAU=: ) rose to a record $1,387 last week as
the prospect of further quantitative easing in the United States
undermined the dollar and prompted investors to buy the precious
metal. [GOL/]
(Editing by Kate Holton and Dan Lalor)

UPDATE 2-African Barrick Gold Q3 profit down on weak output