* Costs expected to fall below current gold price
* Gold prices plunged by nearly $500 an ounce in 2013
* Output expected to rise to 650,000 to 690,000 in 2014
By Silvia Antonioli
LONDON, Feb 12 (Reuters) - African Barrick Gold will overcome last year’s 28 percent fall in the gold price with a big increase in output and stringent cost cutting, its chief executive said on Wednesday.
The Tanzania-focused FTSE 250 company sank to a hefty loss of $781 million for the year to the end of December, broadly in line with expectations, compared to a profit of $62.8 million a year earlier.
That reflected a $823 million impairment charge, most of which had been announced in the interim results, due to lower gold price assumptions and mine planning changes.
It is now targeting output of 650,000 to 690,000 ounces in 2014, above analysts forecasts and up 1-7 percent from 2013.
“Obviously production is going to increase but our main focus is still to drag our costs down. There are still significant opportunities in the mining part of the business,” Bradley Gordon said in a telephone interview.
“We have pulled out $129 million of costs in 2013 but that was mainly in non-mining areas: overheads, explorations. Now, the focus for this year is to fix the mining part of the business and there are more opportunities there than in the non-mining part of the business.”
The nearly $500 an ounce fall in gold prices last year has spurred many producers to shelve projects, reduced overheads and put non-core assets on the block as a result.
African Barrick was under pressure even before the plunge in gold prices last year, hit by illegal mining, power generation problems and strikes.
The company expects its all-in sustaining cost, a measure which includes elements such as exploration, will come down to $1,100- 1,175 an ounce in 2014, down 14-19 percent from 2013.
This could help the producer to turn back to profit taking into account the current gold price of around $1,290.
“Certainly the market should take the forecast production increase positively. It’s a sizeable jump up,” Investec analyst Hunter Hillcoat said.
“On the other hand costs are expected to drop which means that at the current gold price they should be able to generate free cash-flow, which is something they haven’t been doing for a while. It’s a positive outlook.”
Shares in the company reversed early trade losses and were up about almost 3 percent by 1109 GMT.