St. LOUIS () -- The world's largest gold producer, Barrick Gold [NYSE:ABX; TSX:ABX], announced its third quarter profit surged to $405 million, or 46 cents per share, from last year's corresponding period of $113 million, or 21 cents per share.
Third quarter operating cash flow hit a record $805 million, or 92 cents per share, from last year's $232 million, or 43 cents per share.
Gold production for the quarter sat at 2.162 million ounces at an average cost of $281 million, up significantly from last year's 1.509 million ounces. Year-to-date production is at approximately 6.2 million ounces at a $282 average
"Our third-quarter results demonstrate the company's ability to generate robust earnings and cash flow through expanded margins from its global portfolio of assets," CEO Greg Wilkins said in a release.
"This has translated into impressive earnings per share growth as we benefit from leverage to higher metal prices."
Barrick's quarterly copper production hit 95 million pounds for a year-to-date total of 267 million pounds at a cost of 77 cents per pound.
Barrick said that it expects to meet its estimated 2006 gold production levels of approximately 8.6 million ounces at $285 per ounce.
Earlier in the year, Barrick announced the sale of its South Deep mine to Gold Fields for $1.7 billion and is expected to close in early 2007.
NovaGold Bid
On October 24, Barrick announced its "best and final offer" for NovaGold [AMEX:NG; TSX:NG] at a price of $16 per share and extended the offer until November 7th. On October 31, Novagold advised its shareholders to reject the hostile bid, citing it as undervalued.
"We increased the offer to $16 per share and this is our best and final price given what we understand of the assets and the information that has been published it is a significant premium certainly to the price of the Nova shares prior to the bid," Wilkins said in a company conference call today. "And perhaps more significantly it's a premium to the price at which Nova itself issued equities back in February ... and is clearly in line with premiums that have been paid in other similar types of transactions."
Wilkins said that large capital projects such as the Donlin and Galore creek are best handled by companies that have the size and scale of Barrick.
In a company presentation today, Barrick said the offer of $16.00 per share "eliminates significant permitting, development, operating, financing and commodity price risks for NovaGold shareholders accepting the offer."
"The transition from exploration to development is a huge one ... and different companies have different capacities to deal with it, so our offer, I think, is a good offer for the Nova shareholders," Wilkins said.
Speaking of the Donlin and Galore Creek projects, Wilkins said that the assets would augment Barrick's portfolio, but added that they need to be acquired at the right price.
It was also announced that a court hearing was deferred today that was scheduled for November 2 to allot Barrick more response time to Novagold's amended complaint of alleging breach of fiduciary and joint venture duties at Donlin Creek.
Russian Operations
Highland Gold [LSE:HGM] announced today that Barrick plans to increase it current 20% stake in the company to 34% in Russia's fourth largest gold miner.
The London-listed company currently has two operations in Russia, Mnogovershinnoye and Darasun, and has several exploration and development projects.
In the deal, Highland will acquire Barrick's 50% interest in the existing JV companies and will acquire four additional gold exploration interests which Barrick owns, located in both Russia and Kyrgyzstan. Barrick executives are also slated to join the company's management team.
Barrick said that it expects gold production during the fourth quarter to be at its best level yet this year.
Share Price Activity
Barrick shares were trading down 13 cents, or .32% at $30.86 during late afternoon trade on the NYSE.
