By Ben Levisohn
These days, all that glitters is not gold. And certainly not for Barrick Gold (ABX).
Reuters
Over the weekend, Barrick announced that it would delay production at its Pascua Lama mine, which straddles the border between Chile and Argentina and has been beset with environmental problems on the Chilean side. The Wall Street Journal has the details:
The company said that the delay in production and fall in the price of gold and other metals means that it estimates that it will have to take an impairment charge for the mine of around $4.5 to $5.5 billion in the second quarter. The company will complete a final impairment assessment by its second quarter 2013 results release.
In a statement, the company said that given the delayed time table it was reducing estimates of capital expenditure for the mine in 2013 and 2014 by between $1.5 and $1.8 billion. Barrick said that it will update on any longer-term increased expense that the delays will bring in the third quarter of this year. Cost estimates have already climbed from $5 billion to $8.5 billion.
Barrick attributed the delay to weaker gold prices. The SPDR Gold Shares ETF (GLD) has dropped 26% so far this year.
Citigroup analyst Brian Yu slashed his earnings estimates for Barrick. He now expects the company to earn 62 cents a share during the second quarter, down from 68 cents, $3.04 in 2013, reduced from $31.2, and $2.60 in 2014, cut from $2.70.
Despite those cuts, however, he left Barrick rated a Buy:
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