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African Barrick Gold: December Quarter Production Figures

Contributed by Fox-Davies Capital

African Barrick Gold (ABG) has announced its December quarter and annual 2012 production figures. For the quarter ended 31 December 2012 the company produced an attributable 180,684oz of gold and sold 159,585oz. The reason for the low sales figure was that higher grades were mined towards the end of the quarter and the fact that a large proportion of the gold is sold in copper concentrates. This production will be sold early in January 2013. This took production for 2012 to an attributable 626,212oz of gold and sales totalled 609,252oz.

This was a much better quarter for ABG, although problems at the Bulyanhulu mine with paste fill ensured that cash costs will be towards the higher end of the guidance of between US$900 and US$950/oz. These problems will continue throughout the first quarter of 2013. The other good news is that the North Mara Special Mining lease has been renewed on the existing terms and conditions for a fifteen year period. We anticipate that these better production levels at North Mara and Buzwagi will be sustained through 2013.

Now that the threat of a take-over has gone, African Barrick is conducting an operating review to drive improved returns and free cash flow generation from the existing asset base. The plan is to aim for a free cash flow of US$200M per annum. Everything will be looked at, including life of mine plans, and operating costs. Already there is a move to replace some of the expatriate labour with trained up locals which has a significant impact on costs. Energy is another major cost and there is the opportunity to use less diesel going forward.