Barrick Gold profit drops, miner to cut spending

Barrick Gold Corp. plans to cut at least $500 million from spending on major projects this year and may sell assets as gold prices decline, hurting profits.

Jamie Sokalsky, the Canadian miner's president and CEO, said the company is reducing its spending plans to ensure production will result in returns for investors.

"We are committed to a disciplined approach to capital allocation, based on the principle that returns will drive production, production will not drive returns," Sokalsky said. "While we remain positive on the long-term fundamentals for gold and copper, we don't rely on higher metal prices to be the only driver of shareholder returns."

Since the first quarter ended, gold prices have dropped even further and Barrick's stock price has fallen to the lowest levels in two decades.

The June gold contract fell Tuesday by $12.40 to $1,408.80 an ounce, while U.S.-traded Barrick shares closed at $17.59, down 56 percent over the past 12 months. The stock rose 3.4 percent to $18.18 in premarket trading Wednesday.

Net income in the first quarter came to $847 million, or 85 cents per share, down from $1.04 billion, or $1.04 per share, in the first quarter of 2012.

Adjusted profit declined to 92 cents per share from $1.10 per share but still beat the 86-cent prediction of analysts polled by FactSet.

Lower old and copper prices and reduced volumes sold during the quarter hurt profit.

Revenue fell nearly 6 percent, to $3.43 billion. Analysts expected $3.5 billion.

Sokalsky also said Barrick is still evaluating the impact of a regulatory decision that's affecting its Pascua-Lama mine, which straddles the border of Chile and Argentina.

"At Pascua-Lama, we are working to address the environmental and other regulatory requirements on the Chilean side of the project," Sokalsky said. "Concurrently, we are taking a hard look at evaluating all alternatives in light of the uncertainties associated with the suspension of construction in Chile."

The company is moving to cut costs. It will scale back capital spending to between $5.2 billion and $5.7 billion, down from the previous budget of $5.7 billion to $6.3 billion. Barrick is also reducing exploration spending to a range of between $300 million and $340 million, which is $100 million lower than before.