African Barrick Gold Share Discussion Threads

[robrah] 06/8/2013 16:06

More then price of gold . It was the cost of prod and consistant missed in prod targets . A bidder looks for competative advantage not disadvantage.Surely if i picked up on that the china bidders had been in the data roon

[dr biotech] 06/8/2013 15:31

Or more likely their 400p offer wasn't enough. How could they have predicted their legal trouble? Its the fall in gold price that has stiffed them, everything else is a sideshow.

[undervalued companies] 06/8/2013 08:45

The high mining costs, workers troubles and I guess they knew about coming legal trouble.

[robrah] 04/8/2013 13:00

Yip they sniffed around a year ago. And rapidly ran in the other direction .hmmm wonder why

[lovegod] 03/8/2013 15:09

rumours are that the chinese are sniffing around these NOW !!

[robrah] 02/8/2013 07:05

Gild 1288 . May be a decent down day.

[drewz] 31/7/2013 16:29

Says it all:-



All things are relative, and on the face of things, relative to the previous quarter, African Barrick Gold appears to have come up with some very good Q2 results in terms of gold output and operating costs and it does look that the company is beginning at last to get a grip on things now it has had to concentrate on operations once the prospective sale to the Chinese fell by the wayside. Whether it has truly turned the corner towards becoming what was hoped of it when it was spun off from parent Barrick Gold still remains to be seen.

The company operates three mines in Tanzania and is that country's largest gold miner. The flagship mine is the Bulyanhulu underground operation and the others are Buzwagi (open pit) and North Mara, also an open pit operation. A fourth mine, Tulawaka, closed down earlier this year as it had become uneconomic. The company does also have several promising exploration projects at various stages of development in Tanzania and also across the border in Kenya.

Despite the better production results there have to remain questions as to whether African Barrick as a whole is truly viable at current gold prices. On the cash costs front it appears that it should be decently profitable on an ongoing basis, with these coming down commendably to $879 an ounce, helped by higher gold production at 166,000 ounces, but in line with much of the rest of the global gold mining industry its H1 financials are being hit by 'non-cash impairments' of $727 million as resources are written down in the light of the much lower gold prices. It is also perhaps salutary to note that the average gold price received during the first half of the year was $1,480 an ounce, while the metal price is currently some 11% lower than that and will need to recover sharply in the second half of the year for that average level to be anywhere near matched over the full year. The company is now targeting full year guidance at the upper end of its earlier projections at 540-600,000 ounces of gold at cash costs of $925-975 per ounce.

What should worry followers of the company is that on the World Gold Council's latest guidelines of all-in sustaining costs, which takes into account future and ongoing capital expenditure, exploration costs etc. over and above direct mining costs – in other words the level of costs to sustain operations into the future – African Barrick reported these at $1,507 an ounce for the first half. While African Barrick is far from an exception in reporting these all-in costs at a level substantially above the current gold price, it will, of course, focus management into making savings to bring these back down, but some of these will likely be to the long term detriment of the company in terms of ongoing mine and company life. Some will likely lead to deferment of future capital programmes both in terms of delaying some expenditures, while other possibilities will drift away, at least temporarily as exploration costs are also being trimmed substantially. Indeed African Barrick says it has identified some $185 million of annual cost savings in its ongoing review of operations and has itemised its initial cost savings targets as being $95 million of operating cost reductions, $15 million reduction in corporate administration expenses, $50 million reduction in sustaining capital expenditure and a $25 million reduction in exploration spend.

It has already made changes to the mining plan at Buzwagi, effectively cutting back some of the higher cost, low grade sections and thus reducing likely mine life from 10 years to 6.6 years. One can probably expect to see more of this kind of cost saving replanning being entered into in the months ahead.
FINANCIALS

The company reported adjusted net earnings for the first half of the year of US$39.3 million (9.6 cents per share), after one-off adjustments of US$741 million, primarily due to non-cash impairment charges of US$727 million, post tax related to Buzwagi ($543 million), North Mara ($128 million), Tulawaka ($17 million) and Nyanzaga ($39 million). The overall net book loss amounted to $701.2 million (a loss of 171.0 cents per share) and operational cash flow was $99.0 million.

In commenting on the latest results, African Barrick's CEO, Greg Hawkins said "We have delivered strong operational performance in the first half, with production tracking ahead of guidance and cash costs below the bottom of the guidance range. We have taken decisive action at all of our mines, including the reshaping of the life of mine at Buzwagi, in order to adapt to the lower gold price environment. We have a solid base from which to implement the findings of the Operational Review, which has identified potential cost savings of US$185 million across the group. The combination of asset optimisation focused on cash flow generation and lower gold price assumptions has contributed to a non-cash post tax impairment charge of US$727 million. Having taken these steps, we remain confident in the ability of our asset base to deliver shareholder value which is reflected in the decision to continue with our stated dividend policy. We remain on track to achieve our full year guidance."

[bobsidian] 30/7/2013 12:43

It is the all in costs, which include sustaining capital expenditure, relative to the price realised for gold that makes for interesting viewing. Using that metric, ABG is effectively loss making on an ongoing basis at current gold price levels.

ABG seems now to be very much a leveraged play on movements in the price of gold.

If Goldman Sachs succeeds in getting its way and orchestrating movements to fulfil its targets and gold moves down to $1,050 a troy ounce by year end then this could have a significant adverse impact on the share price of ABG even from these lowly levels. However, I do have a suspicion that Goldman Sachs have shot their bolt and that the low for the price of gold for the year may be already in when it hit $1,179 a troy ounce in June.

On the other hand if history is a guide then western equity markets look set for a sustained decline from August onward. If such declines do indeed come to pass then the margin calls that may be triggered could also trigger a decline in the price of gold on the back of necessary realisations of the more liquid of asset classes.

Quite a few market commentators were forecasting a sell off in western equity markets during the U.S. earnings season as a slowing in the pace of earnings growth was announced. But such a sell off has not happened. Equity markets - ever the asset class to move contrary to the majority view.

[dr biotech] 30/7/2013 10:16

Conference call started at 9.30, I'm not listening but the share price reaction isn't overly inspiring. Otherwise decent set of results but clearly this is just a punt on the pog. FWIW I have take a small position at 1.15 - normally means time to bail out.....

[kooba] 30/7/2013 08:52

JPMEurope Equity ResearchAfrican Barrick Gold: Q2'13 financials & operational review update - increase PT 27% to 140p/shBloody rampers!!

[addison17] 30/7/2013 08:24

Very good summary Undervalued C, good points and bad points, and at lest they appear to be getting gold out of the ground which always helps.
Thankfully Sp is blue this morning.

[kooba] 30/7/2013 07:54

" we are well placed to deliver solid returns even in a lower gold price environment"Sums it up... But if/when gold rallies then the operational gearing really kicks in.Should be trading above 120p on the production and cost beats.Still face challenges but clearer picture going forward and should be attractive to gold bulls IMO.

[robrah] 30/7/2013 07:46

Goodluck to holders.

[undervalued companies] 30/7/2013 07:27

As I thought big write downs $741m off nav dividend cut $4 to $1 however abg doing the best they can.

Concerns production going forward in 2014 due to cuts and gold price by then.

Costs $879 to $900 good start but far more could be done. Remember break-evens est $1250 or fox d capital $1,400 .

It all rests this autumn with the gold price it's not bottomed yet and so we watch the falling knife mid term. I read many posts here last year all on losses of 99.5% thinking this monster had turned little rallies end but I guess the rampers will trade it.

[kooba] 29/7/2013 16:12

Encouraging...some volume buying ahead of the update tomorrow...fingers crossed they please the market looks as if some think they will.Further cost cuts and efficiency measures cutting capex and dividend at least halved ,write offs in carrying value of assets plus some reduced life of mine contingencies.But this is already factored in depends if they can convince they can deliver the outcome of review against the backdrop of steadier pog..could rally bit further..but really needs the pog getting back nearer $1500 to see a proper recovery imo.Bon chance.

[undervalued companies] 28/7/2013 20:21

Dreamers $900 by mid 2014 slowdown in china and limited buying in India are two main reasons plus investors wanting interest from other assets.

Ask jim rogers.

[undervalued companies] 26/7/2013 12:15

ummm £4 down to £1 area yes it has over 7 months

[pineapple1] 23/7/2013 10:02

place your bets.....This has not noticably underperformed the sector as far as i can see so should bounce higher IF the news is good.

Up the escalator or down in the lift

[robrah] 23/7/2013 09:11

Pineapple If they fail to impress the market on the saving and pog doea not go higher. This could hit 75 oreven 50 very quickly

[pineapple1] 23/7/2013 08:53

Exactly.Writedowns and large ones at that have been factored in.The price has been falling in anticipation of them.

There is no ramping here as far as i can see.Yes it could fall further but the majority of the falls have been made.Any good news will result in a major re rating if ABG shows they are taking an axe to costs.Always good news for an equity price.
imho

[kooba] 23/7/2013 08:47

Top sliced 116p...20p in the bag all down to my ramping on advfn...oh the powerLmfao

[robrah] 23/7/2013 08:00

Lol undervalued the jimmy s comment was not necessery . I holder a similar view on abg .It should good today . And to be fair it does have value . But also has a lot more that can go wrong . Production miss. Higher cost of production Power loss Etc But we all know that.And the market ha factored it in. Good luck to the holder long or short.

[kooba] 23/7/2013 07:49

You are a very sad individual.