UPDATE 1-African Barrick cuts costs, says not finished yet

Tue Jan 21, 2014 3:26am EST

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(Adds details, CEO and analyst comment)

By Stephen Eisenhammer

LONDON Jan 21 (Reuters) - Tanzania-focused miner African Barrick Gold beat its production guidance for 2013 while cutting costs in the fourth quarter, and pledged to do more to improve operational efficiency.

However, a lower gold price will mean a cut in reserves at the firm's Bulyanhulu project, as the FTSE 250 company switches to using a $1,300 gold price for its calculations from $1,500.

The miner said on Tuesday it produced 641,931 ounces of gold last year, beating its guidance by 7 percent on strong performances from its North Mara and Buzwagi mines.

Cash costs in the fourth quarter were $774 per ounce sold, well below 2013 guidance of $925-$975 per ounce given by Bradley Gordon who was appointed as chief executive in August.

Analysts at Canaccord said the results were "stronger than expected," while Gordon described them as "pleasing."

"We are starting to gain some credibility in the market now I think," Gordon told Reuters.

African Barrick shares were up 3.5 percent in early morning trade. The company's share price has more than doubled since hitting a low last June.

Gordon said he would now switch his attention to driving operational efficiencies over the next 24 months in a bid to improve the company's profitability despite a lower gold price.

"What my focus now is on is drilling, blasting, hauling and milling, because there hasn't been that much attention on that," he said, adding that improvements would focus on Bulyanhulu.

African Barrick is one of many precious metal miners battling to turn a profit after gold recorded the steepest price falls in a generation last year, from which it has yet to recover.

The price of gold is over 20 percent lower than at this time in 2013, prompting many producers to shelve projects, reduce overheads and put non-core assets on the block. (Reporting by Stephen Eisenhammer; Editing by Jason Neely and Mark Potter)

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