African Barrick makes progress on costs, shares rise

An overview of Barrick Gold Corporation's Pueblo Viejo gold mine is seen in Cotui
An overview of Barrick Gold Corporation's Pueblo Viejo gold mine, one of the world's largest, is seen in Cotui December 11, 2013. REUTERS/Ricardo Rojas

(Reuters) - African Barrick Gold Plc said revenue and core earnings fell in the first quarter as an 18 percent rise in production failed to make up for a 19 percent drop in realised gold prices.

But investors took heart from a fall in operating costs and improving ore grades and pushed up the miner's shares as much as 7 percent in early trading on the London Stock Exchange.

African Barrick also said on Thursday that its board had approved an acceleration of mining at the upper east zone of its Bulyanhulu mine in northwest Tanzania.

The zone is expected to produce 1.7 million ounces of gold, averaging 60,000 ounces a year, with initial production expected within three months, the company said.

African Barrick, whose main producing mines are in Tanzania, said core earnings - or earnings before interest, tax, depreciation and amortisation (EBITDA) - fell 21 percent to $64.7 million in the quarter ended March 31.

Revenue slipped 12 percent to $216.3 million as the average realised gold price fell to $1,303 per ounce.

Gold prices have been falling as investors prepare for the roll-back of the U.S. Federal Reserve's extraordinary stimulus measures and invest in higher-yielding assets such as the U.S. dollar.

African Barrick, which initiated an operational review last year after parent Barrick Gold Corp's failed attempt to sell the business to a Chinese buyer, has tried to combat the fall in gold prices by increasing output and cutting costs.

All-in sustaining costs fell 28 percent to $1,131 per ounce sold during the quarter, while average grades rose 23 percent from a year earlier to 3.2 grams per tonne.

The company said gold production rose to 168,375 ounces in the quarter, keeping it on track to meet its target of 650,000-690,000 ounces of gold production this year at all-in sustaining costs of between $1,100 and $1,175 per ounce.

African Barrick shares were up 5 percent at 260.9 pence at 0725 GMT.

(Reporting by Karen Rebelo in Bangalore; Editing by Gopakumar Warrier and Ted Kerr)