Gold miners report weaker-than-expected earnings; Barrick names two new directors – by Peter Koven (National Post – July 30, 2014)

The National Post is Canada’s second largest national paper.

Canada’s gold miners maintain they are operating well and continuing to find ways to cut costs. However, their second quarter earnings still fell below expectations.

Barrick Gold Corp., Kinross Gold Corp. and Agnico-Eagle Mines Ltd. all had positive things to report as they released Q2 results on Wednesday evening. Notably, Barrick lowered its cost guidance for the year, while Agnico raised its production guidance. But the stocks dropped in after-market trading as each result was slightly below consensus analyst estimates.

Barrick’s earnings were highlighted by the surprise announcement that it is naming two new directors, one of whom is a longtime associate of chairman John Thornton.

Michael Evans was a Canadian gold medalist in rowing in 1984, and was formerly vice chairman at Goldman Sachs. He worked closely with Mr. Thornton in their Goldman days, and his appointment will likely fuel further speculation that Mr. Thornton is consolidating his power at Barrick . Some investors already believe that is the case following the gold miner’s move to replace chief executive Jamie Sokalsky with two co-presidents earlier this month.

The other new director is Brian Greenspun, a prominent publishing and telecommunications tycoon in Nevada, which remains Barrick’s most important mining jurisdiction.

Barrick said all-in sustaining costs were US$865 an ounce in the second quarter, well below its guidance for the year of US$920 to US$980. That guidance was lowered to between US$900 and US$940 an ounce on Wednesday.

Co-president Kelvin Dushnisky promised in a statement that Barrick would “build on the momentum we have today.” His counterpart Jim Gowans added that there are opportunities to “surface additional value and improve efficiency across our portfolio.” Mr. Sokalsky, the outgoing CEO, pointed out that Barrick has lowered its mid-year cost guidance in two consecutive years.

Barrick’s results were slightly marred by a US$514-million writedown on the Jabal Sayid project in Saudi Arabia. However, that was not surprising after it agreed to sell half the project to the Saudi firm Ma’aden at a fire-sale price of US$210-million.

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