Monday, October 29, 2012

African Barrick lowers guidance after ‘challenging’ quarter

London-listed African Barrick Gold has again lowered its production guidance, citing illegal mining activities at North Mara and lower-than-planned production levels at Bulyanhulu and Buzwagi.
The Tanzania-focused mining company said on Friday its 2012 production would be between 5% and 10% below the bottom of its previous range of 675 000 oz to 725 000 oz of gold.

African Barrick Gold, a unit of Canada’s Barrick Gold, is forecasting a cash cost of $900/oz to $950/oz for the financial year.
Last year, the gold miner produced 688 278 oz, which was below its forecast of 700 000 oz to 760 000 oz. In 2010, delays and fuel theft at Buzwagi forced the company to lower its forecast twice.

CEO Greg Hawkins said that the September quarter had been a challenging three months for African Barrick.

“We were expecting to see a step-up in production levels leading into the end of the year and 2013, but there have been production interruptions and issues across each of our sites.

“The ramp-up in grade at North Mara is positive and expected to continue in fourth quarter, but we have been disrupted in our efforts to mine it at a normal rate given an increase in illegal mining operations,” he said.

African Barrick produced 147 786 oz for the third quarter, which was in line with the production from the first and second quarters of the year, but a 19% decrease compared with the corresponding quarter in 2011.

The miner also reported revenue of $265-million for the period, $89-million lower than the $354-million in the third quarter of 2011, owing to lower mining activity at its operations in Tanzania.

Although production increased at North Mara by 17%, this was more than offset by the impact of lower mined grades at Buzwagi stope and mobile equipment availability issues at Bulyanhulu, and batch milling at Tulawaka.

At Bulyanhulu, mining performance was impacted by reduced stope availability, lower availability of underground mobile equipment and paste filling delays, which resulted in lower ore tons hoisted.

Mill throughput was 9% lower than the third quarter, as a result of the lower mining activity in the quarter, leading to lower production. Buzwagi saw a marked improvement in equipment availability, which led to tons mined being 53% higher than in the third quarter of last year and a 22% improvement over the previous quarter.

Further, the planned focus on the waste-stripping programme has resulted in mining of lower-grade areas of the pit and, therefore, a decrease in the head grade delivered to the plant. “It is anticipated that this would enable higher grade zones to be accessed later this year and into 2013,” the company said in a statement.

Throughput levels were also lower than expected owing to unplanned mill maintenance. At Tulawaka, there was an increased focus on underground development work aimed at extending the mine life. As a result, there was a 30% decline in ore tons mined compared with last year’s comparative period.

“Together with the lack of surface stockpiles, this led to continued batch processing of the underground material blended with mineralised waste,” it added.

At a group level, gold sales were in line with production, and 20% lower than last year, owing to the decrease in production.
Meanwhile, Hawkins said African Barrick’s acquisition of an exploration package in Kenya represented an important first step in expanding the business more broadly in Africa.

The company bought ASX-listed Aviva Corporation’s Aviva Mining Kenyan gold and base metals assets in a deal valued at A$20-million.

Edited by: Mariaan Webb