Barrick Gold (ABX) Plunges 9.3% on Dismal Earnings Report

Barrick Gold (ABX), the world’s largest gold mining company, fell as much as $3.76, or 9.3%, to $36.74 per share on Thursday after delivering very disappointing third quarter earnings results.

The Canadian-based gold miner reported earnings per share (EPS) of $0.62, although when adjusted for various one-time items the figure came in at $0.85.  Nonetheless, Barrick’s adjusted EPS was well below the $0.99 consensus estimate among Wall Street analysts.

(For several analysts’ comments on Barrick’s earnings, as well as price target and rating changes, visit GoldAlert Pro at http://pro.goldalert.com)

On the production side, the Company announced quarterly gold ounces of 1.78 million – which also missed the forecasts of most analysts.  Moreover, Barrick Gold reduced the high-end of its full-year production guidance from 7.8 to 7.5 million ounces and raised its cash cost estimate to $575-$585 from $550-$575 per ounce.

Many research analysts also raised concerns about Barrick’s Pascua Lama gold project – located on the border of Chile and Argentina – after the Company raised its capital expenditures estimate on the project to $8.0-$8.5 billion from $7.5-$8.0 billion and delayed the start of production to the second half of 2014 from mid-2014.

GMP Securities analyst George Albino noted that the Pascua Lama capex increase was particularly worrisome because Barrick had already increased its original capex forecast for the project by 50% earlier this year.

The sell-off in shares of ABX had a significant impact on the Market Vectors Gold Miners ETF (GDX), of which it is the largest component.  While several other widely-traded gold stocks moved higher this afternoon – including Agnico-Eagle Mines (AEM) and Goldcorp (GG) – the GDX nonetheless remained lower by $0.66, or 1.3%, at $52.24 per share.