NEW YORK ( TheStreet) -- Canada's Barrick Gold ( ABX) -- the world's biggest producer of gold -- posted a narrower second-quarter loss on Thursday, and its projection for lower production costs and capital spending are reasons for cautious optimism.
Its shares traded at $18.25, up 17 cents, on Friday morning. Year-to-date, the stock is up 3.5%, compared with a 4.5% rise for the Standard and Poor's 500 Index.
Barrick's net loss of $269 million, or 23 cents per share, includes an impairment charge of $514 million for the company's Jabal Sayid copper project in Saudi Arabia due to a long delay in developing the mine. Barrick has agreed to sell 50% of its stake in the project to Ma'aden, a Saudi Arabian mining company, for $210 million.
Excluding the impairment charge, Barrick's earnings were $245 million, or 14 cents per share. Analysts were expecting earnings of 16 cents per share. Revenue fell 24% to $2.43 on lower gold prices and output.
Barrick lowered its cost estimates for gold production from $950 per ounce to $920 per ounce. This lower cost should boost the company's profit margin in coming quarters
The company also lowered its estimate for capital spending for the year from $2.5 billion to $2.3 billion. The lower spending will lessen Barrick's need to raise funds to maintain and develop projects such as its Pascua-Lama mine, which is located on the border of Chile and Argentina. The project was shut down back late 2013 because of environmental and regulatory issues and has yet to reopen. Barrick has incurred $300 million in ramp down costs this year for the mine.