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Gold boost for African Barrick

Discussion in 'Biashara, Uchumi na Ujasiriamali' started by Juma Contena, Feb 18, 2011.

  1. Juma Contena

    Juma Contena JF-Expert Member

    Feb 18, 2011
    Joined: May 21, 2009
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    Gold boost for African Barrick

    By Christopher Thompson:

    The FTSE 100 Tanzania-focused gold miner made a pre-tax profit of $309m (£193m) in 2010, up from $150.4m in 2009, as turnover rose to $975m ($711.1m) on an average gold price of $1,240 an ounce, up from $974.

    Strong fourth-quarter results contributed handsomely, with revenue up from $229.6m to $309.5m and despite decreased production – down 2 per cent to 700,934 ounces – annual sales rose 6 per cent to 724,083 ounces.

    The miner proposed a final dividend of 3.7 cents, bringing the total pay-out to 5.3 cents, on earnings per share of 53.2 cents (14.3 cents).

    Shareholders have endured a volatile ride since African Barrick was floated by Barrick Gold, the Canadian miner, in March 2010 at a price of 575p. On Wednesday the shares closed up 5½p at 532½p.

    In July it cut its 2010 production forecast because of delays accessing higher grade ore at Buzwagi, the newest of the company’s four mines in Tanzania.

    Last October it warned that “organised and systematic” theft of fuel at Buzwagi meant overall 2010 gold production would be cut by more than 30,000 ounces to a figure comparable to 2009.

    Trouble at Buzwagi and lower than expected production helped push production costs up 7 per cent to $569 an ounce. Greg Hawkins, chief executive, said the miner, which has no debt and $401m in funds, expected to produce between 700,000 and 760,000 ounces in 2011.

    Cailey Barker, an analyst at Numis Securities, said he was “cautiously optimistic” for the year ahead. “They didn’t start on a great foot [so] for them its about building market confidence. They’ve got brownfield expansions at all four mines that could bring on 200,00 extra ounces . . . that should drive the share price.”

    FT Comment

    Mr Hawkins said he would abstain from a celebratory gin and tonic to mark his first anniversary in the job this week. It has been a similarly sober year for shareholders who had high hopes for Barrick Gold’s spin-off of its African assets.

    Production difficulties and theft led to two cuts in the production forecast and damped expectations. It also pointed to the political risk of operating in emerging economies such as Tanzania, where African Barrick’s assets are all based.

    The shares currently trade at 12 times 2011 earnings, a significant discount to the 20 times sector average. If Mr Hawkins can prove that problems at Buzwagi are over – it is expected to add 40,000 ounces to overall production in 2011 – and ploughs ahead with brownfield expansion elsewhere, African Barrick could prove good value.
  2. Semilong

    Semilong JF-Expert Member

    Feb 18, 2011
    Joined: Mar 5, 2009
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    du yaani huu wizi wa mafuta ndio sababu kubwa ya kupunguza production namna hii, mbona hawasemi jinsi wanavyosamehewa ushuru wa mafuta
    ukitaka kujua how much they are making angalia hawa jamaa hawana deni halafu bado serikali inawasamehe kodi kibao