Power Problems in Mines Upset African Barrick Gold Full Year 2011 Yield Output, Down 2% Versus 2010

The continuous power disruptions brought by the unreliable power supply in Tanzania have seriously affected the gold production yield of African Barrick Gold (ABG), with fourth quarter 2011 figures sliding 11 per cent. This development caused the unit of the world's largest gold producer, Barrick Gold Corporation, to miss its full year 2011 production targets by 2 per cent from a year ago.

ABG, Tanzania's largest gold producer and one of the five largest gold producers in Africa, reported on Wednesday total gold output in the final quarter of 2011 dropped 11 per cent to 160,020 ounces compared to 179,730 ounces in the same quarter of 2010. As a result, full year production fell two per cent from 2010 to 688,278 ounces.

ABG had forecast 700,000 to 760,000 ounces gold production target for 2011 but had warned during the last quarter this might be impossible because of power disruptions to Tanzania's national electricity grid.

"During the quarter our output was impacted by the power situation in Tanzania, but as we go into 2012, we will benefit from our investment in additional back-up power generation and are well positioned to continue delivering on our potential and generating significant cash flows from our assets," Chief Executive Greg Hawkins said in a statement.

With this, ABG has installed a 16-megawatt back-up generator to possibly prevent or minimise power outages in its mines. The group has commissioned back-up power for its Buzwagi mine, while it upgraded back-up power facilities at the Bulyanhulu mine. The Buzwagi and Bulyanhulu operations were the most affected by the power outages as ABG estimated combined total production loss of 20,000 ounces for the quarter.

Gold sold for the quarter totalled 158,869 ounces, 1 per cent lower than from the production figure and a fall of 21 per cent, compared with 201,298 ounces sold in the same quarter of 2010.

Still, with prices of gold gaining 28 per cent over the past year, with 19 per cent in the last quarter of 2011 alone, ABG said this contributed significant impact on earnings, with cash position at around $584 million by end 2011.

Listed on the Main Market of the London Stock Exchange, ABG has four producing mines, all located in the north of Tanzania, plus several exploration projects at various stages of development, it said in its Web site. ABG aims to reach annual production of one million ounces of gold by 2014.