Barrick Gold Corp. posted lower-than-expected first-quarter earnings as revenue at the world’s largest gold company fell amid a continued slump in the gold industry.
The earnings’ miss is a further bump in Barrick’s professed aim of becoming a more focused, leaner gold producer and comes as some of its investors question corporate governance at the Toronto-based company.
First quarter 2015 net earnings were $57 million, or 5 cents a share, compared with $88 million, or 88 cents a share in the same period last year. Analysts had expected earnings per share of 9 cents.
Barrick posted revenue of $2.25 billion, down 15% from the same period last year, and below the $2.38 billion that analysts polled by Thomson Reuters has expected.
The company said that its costs will be 20% lower in the second half of the year, with full-year all-in sustaining costs in line with guidance of $860 to $895 per ounce of gold mined.
Analysts polled by Thomson Reuters were forecasting lower profits in general from gold miners for the January to March quarter. Gold miners have been hit hard by a slump in the price of gold, which has lost over a third of its value since its peak in 2011. The average gold price in the quarter was $1,218 an ounce, analysts say, up slightly from the fourth quarter, but still down about 6% from a year earlier.
Still, few gold companies have attracted as many critics as Barrick, which built itself up through debt funded acquisitions and massive projects which have seen billions of dollars’ worth of value written off.
Newmont Mining Corp., the world’s second-largest gold mining company by production, kicked off the sector’s results season by doubling its profit in the first quarter, beating analysts’ estimates.
Barrick has cut head-office staff and talked of becoming more entrepreneurial by making decisions closer to the actual mines. The company has also said it will cut $3 billion in debt in a bid to address concerns that it is overleveraged, in part by selling two mines.
“We are determined to once again be the world’s leading gold company, a company that consistently grows free cash flow per share from a portfolio of the best gold assets in the best regions,” Barrick said in its release.
In recent weeks, some investors have rebelled against the company’s pay rise for Chairman John Thornton. They say Mr. Thornton’s 36% pay raise in 2014 is excessive given the company’s share price lost around a third of its value that year. Three of the world’s largest pension funds said they will withhold their votes for the re-election of Mr. Thornton and the mining company’s lead director in a protest aimed at what they see as Barrick’s continued poor corporate governance.
It hasn’t all been bad news for Barrick, whose share price has risen by almost 25% this year to date. Last week, the company said that it will shelve plans to close its Lumwana Copper Mine in Zambia after the southern African nation scrapped a controversial mine-royalty plan.
On Monday the company also announced that it has made a “significant new gold discovery” in Chile.
