Wednesday, September 29, 2010

Barrick (ABX) in Peru: Where did all the production go?

The Peruvian Mining Ministry (MEM) monthly stats for metals production, August edition, came out today. Of course, Otto the wonk gets stuck into them straight away and notes this-n-that stuff (more tomorrow) but the shocker was Barrick's (ABX) production at its two Peruvian operations, Pierina and Alto Chicama (aka Lagunas Norte). Here's the chart:

 click to enlarge

As you can probably make out, production has fallen off a  veritable cliff. The two mines combined have been good for a typical 3m to 4m grams per month (3m g = 96,463 oz and 4m g = 128,617 oz) with the odd spike to up and over 5m grams. But the last two months?

July 2010= 2,106,735 grams (that's 67,741 ounces)
August 2010= 1,471,530 grams (that's 47,316 ounces)

Now we know there was a slowdown in production planned and expected at the two mines (getting long in the tooth type stuff, esp at Pierina), but nowhere near as sharp as this. I mean, in 2q10 the two mines produced a total of 9,621,095 grams (309,360 oz) and it'd need an incredible month of 6m g or so to catch up in September for that to be matched. Can't be done. Big production hole coming up, folks.

The Barrick ConfCall and results party is set for October 28th and you can bet yer tush that some pointed questions will be asked about the company's Peru operations on that day. DYODD, dude