- Firm makes annual loss
- Results hurt by gold price and change to mine plans
- Dividend reduced to three cents from 16.3 cents
- Cost savings to boost 2014 results
African Barrick Gold reported an annual loss, reflecting impairment charges relating to the impact of lower gold prices and changes to mine plans.
The miner posted a net loss of $781m in the year ended December 31st, compared to earnings of $62m the previous year. Underlying earnings, on the other hand, came in at $106m (Westhouse Securities: $84.1m)
An impairment charge shaved $823m off earnings, including $96m related to the decision to defer mining at the Gokona Cut 3 prospect at North Mara. Works at Gokona has been delayed while the group finalises the feasibility study into alternatives of mining this reserve.
The life of the mine plan at Buzwagi in Tanzania, which the company said "historically has had a number of challenges", was rescheduled to enable positive cash flow generation.
The group's results were also hurt by falling gold prices, down to an average realised price of $1,379 per ounce from $1,668 in 2012.
"2013 was a year of significant change within ABG as we undertook a major operational review to ensure the business was set up to deliver increasing value in a lower gold price environment," said Chief Executive Brad Gordon, Chief Executive.
"As a result of mine planning changes and lower gold price assumptions we have incurred non-cash impairment charges at a number of our assets, but we expect positive cash flow generation at each of our sites going forward."
Due to the revised life of mine plans and lower future gold price assumptions, the total reserve base was reduced by 3.9m ounces to 12.7m ounces.
Revenue dropped to $221m from $275m and earnings before interest, tax, depreciation and amortisation (EBITDA) declined to $44m from $75m.
As a result the company decreased its 2013 dividend to three cents per share from 16.3 cents the prior year.
On a brighter note, the firm achieved growth in full-year production and sales, up 3% to 641,931 ounces and 7% to 649,742 ounces respectively.
Cash costs and AISC drop as costs taken out of the business
The company identified more than $185m of costs savings across the business including capital spend, exploration, corporate overheads and organisational structures. By the year-end the firm removed $129m of cost from the business to deliver a reduction in all-in sustaining costs (AISC) of 14% to $1,362 per ounce. ASIC in the fourth quarter were down 30% to $1,171 per ounce.
Looking ahead to 2014, the firm expects increased production of 650,000 to 690,000 ounces of gold (Westhouse Securities: 630,000) at reduced cash costs of $740 to $790 per ounce sold and reduced AISC of $1,100 to $1,175 per ounce sold, driven by sustainable cost savings and updated mine plans.