African Barrick scales back production targets

African Barrick Gold (ABG) has been forced to scale back its production guidance for the full year after a "challenging" third quarter which saw output and sales shrink dramatically year-on-year.

The company has reduced its anticipated full-year volumes by 5-10%.

Revenues in the three months to September 30th were $265m, well below the $354m reported in the third quarter of 2011. Meanwhile, the cash margin sunk from $1,087 an ounce (oz) to $723/oz.

Attributable gold production in the quarter came in at 147,786oz, in line with the first and second quarter but down 19% year-on-year, as a result of production interruptions and illegal strikes.

"This has been a challenging quarter for ABG. 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," said Chief Executive Officer Greg Hawkins.

The company said it has seen the ramp up in grade at North Mara which is positive and expected to continue in the fourth quarter, but have been unable to mine it at a normal rate given an increase in illegal mining operations. Meanwhile, production levels at Bulyanhulu

and Buzwagi have also been lower than planned.

Hawkins said: "In light of this, we now believe that our full-year production will be around 5-10% below the bottom of our previous range of 675,000 - 725,000 ounces of gold, at a total cash cost of US$900-950 per ounce."

The cash cost per oz sold surged from $687 last year to $965 in the quarter, though in line with the first half.

Earnings before interest, tax, depreciation and amortisation sank 55% year-on-year to $83.43m. Meanwhile, the cash generated from operating activities fell 64% to $54.96m.

In other news, the company said that it has completed its acquisition of Aviva Mining (Kenya) for $20m after receiving the approval of the Kenyan Competition Commission earlier this week.