Sounds like they need a high grade deposit with real low energy costs:

Barrick 2007 profits drop 25.7% on costs, lower grades - Regional
Thursday, February 21, 2008

Canadian Barrick Gold (NYSE: ABX) saw its profits last year drop 25.7% to US$1.12bn as gold output fell to 8.06Moz in 2007 from 8.64Moz the year before, and cash costs rose from US$283/oz to US$350/oz, the company reported in its year-end financial statements.

However, sales rose to US$6.33bn in 2007 from US$5.63bn the previous annum. In South American operations, Barrick produced 2.08Moz last year compared to 2.10Moz in 2006.

Gold grade averages declined 22% to 0.052oz/t (1.62g/t) in 2007 from 0.067oz/t the year before, the company reported.

However, in the fourth quarter alone Barrick's profits rose 28% year-on-year to US$537mn on 2.14Moz of gold output from global operations, compared to 2.44Moz in 4Q06. Of that, 620,000oz came from South America in the recent quarter versus 654,000oz in the year-ago period.

Cash costs in the fourth quarter rose to US$375/oz from US$287/oz year-over-year.

In copper output, the company produced 402Mlb (182,344t) in 2007 and 101Mlb in 4Q07, compared to 367Mlb and 100Mlb in the respective year-earlier periods.

Cash costs inched up to US$0.83/lb in 2007 from US$0.79/lb in 2006 and to US$0.81/lb in 4Q07 compared to US$0.82/lb in 4Q06.

At the end of 2007 the company's proven and probable reserves stood at 125Moz with a 1.50Moz increase over the year-ago amount.

In South American production, tonnes mined dropped 10% in 2007 to 151Mt mainly due to a 56% decrease from the Pierina mine in Peru, where the company altered the mine plan to remedy problems related to lack of waste dump capacity, Barrick said.

Meanwhile the Veladero mine in Argentina suffered a 32% decrease in tonnes mined last year caused by limited equipment availability.

In forecasts for 2008 performance, Barrick CFO Jamie Sokalsky said during a results conference call Thursday that the company is expected to churn out 7.6M-8.1Moz of gold this year at an average cash cost of US$390-415/oz.

Sokalsky added that Barrick anticipates copper output of 380M-400Mlb in 2008 at a cash cost of US$1.15-1.25/lb.

Higher energy costs expected for this year represent some two-thirds of Barrick's anticipated costs he said, adding the calculation assumes an average oil price of US$90/barrel.

Sokalsky added that Chile, where the company runs the Zaldívar mine, is expected to drive cost hikes due to rises in energy and sulfuric acid.

Company CEO Greg Wilkins said in the conference call that Barrick expects to pay roughly US$200/t for sulfuric acid when a few years ago the cost was less than half.

Barrick is the world's largest gold miner. Its Latin American operations also include the Lagunas Norte gold mine in Peru, the Cerro Casale gold-copper project in Chile, the Pascua Lama gold-silver project on the Chile-Argentina border and the Pueblo Viejo project in the Dominican Republic. It also has assets in the US, Canada, Australia/Oceania and Africa.

Pablo Gaete
Business News Americas