DENVER—The soaring price of gold added luster to third-quarter earnings at Barrick Gold Corp. and Newmont Mining Corp. sending their stocks higher Thursday.
Even a garish net loss at Barrick came with a silver lining. The company paid a premium to unwind a gold hedging program it used to lock in future sales, betting that sales will be so strong going forward it will easily forget about the $5.7 billion non-cash write-off.
Most investors agreed and Barrick shares jumped $2.45, or 7 percent, to close Thursday at $37.03.
Investors buy gold as a safe haven during difficult economic times and the price of the metal also rises as the dollar weakens. The price of gold climbed steadily since June and topped $1,000 an ounce in September.
Quarterly results at Barrick and Newmont were stronger as both cut costs and sold more gold at higher prices.
Barrick and Newmont, with operations ranging from the United States to Australia and Africa, also benefited from stronger copper sales and lower costs, such as fuel prices.
Newmont more than tripled sales of copper, which is used in building construction, automobiles and consumer products. Barrick’s copper sales rose slightly.
And both miners see production increases for 2010.
For the July-September period, Barrick reported a net loss of $5.35 billion, or $6.07 per share, largely because of the write-off. In the year-ago quarter, Barrick earned $254 million, or 29 cents per share.
Excluding the huge price of freeing itself from contracts that had been locked in, Barrick said its earned 54 cents per share. Revenue totaled $2.1 billion, up 12 percent from $1.88 billion.
Barrick reported an average realized price of $971 per ounce of gold, up 11 percent from a year ago. It sold 1.9 billion ounces of gold, up from 1.8 billion a year ago and the same amount as was sold in 2007.
Barrick also sold 86 million pounds of copper at $2.90 a pound, compared with 85 million pounds at $3.49 a pound in the third quarter of 2008. Even though it’s better than last year, results show there is a long way to go. The company sold 99 million pounds in 2007 during the same period.
For the year, Barrick affirmed its production estimate of between 7.2 million and 7.6 million ounces of gold. Looking ahead, the company forecast its production would range between 7.7 million and 8.1 million ounces in 2010.
Newmont Mining Corp., based in Denver, said its third-quarter profit totaled $388 million, or 79 cents a share, compared with $191 million, or 42 cents per share, in the third quarter of 2008.
Its shares rose $1.50, 3.6 percent, to $43
Revenue for the three months that ended Sept. 30 jumped 50 percent to $2.05 billion from $1.37 billion, with copper sales more than quadrupling and gold sales rising steadily.
Newmont said it sold 1.33 million ounces of gold at an average price of $964 per ounce, compared with 1.27 million ounces a year ago and 1.33 million ounces in the third quarter of 2007.
It sold 64 million pounds of copper at an average price of $2.80 per pound, compared with just 20 million pounds a year ago when the recession hit. The company sold 70 million pounds of copper in the third quarter of 2007.
For 2010, Newmont estimated a 5 percent to 10 percent increase in equity gold sales.
