TORONTO — Barrick Gold Corp. expects to see only modest effects from rising inflation this year, said chief executive Mark Bristow.
“There is some pressure, it depends on your outlook on the oil and gas prices," he said on an analyst call Monday.
The company is currently on budget for the year, but Bristow warned that if spot prices for energy were to continue to the end of the year, it would add about one per cent to total costs.
Prices for key inputs like oil and steel have been rising as economies ramp up from COVID-19-related shutdowns, raising concerns about the potential for rapid inflation.
Barrick has been insulated from some of those pressures because materials for many of its major projects were already contracted before prices started to rise, Bristow said.
The company has also avoided some supply crunch issues caused by the pandemic because it increased its stock holdings of materials early on, and has created a diverse supply chain, he said.
Looking toward next year, Bristow said that he does expect further inflation but that overall he's especially concerned about how the economic effects of the pandemic will play out.
"There will be inflation, there’s so much money around. For me the big worry is how does the real world deal with what’s coming at us. You know we don’t understand the impact of the pandemic on the rest of the global economy, it’s been very insulated."
He's said he's also concerned about how the developing world will be affected by and react to climate change.
"So I think we’re in for a couple of surprises and not all good ones, as much as we want things to look better.”
For the second quarter the company reported a second-quarter profit of US$411 million, up from US$357 million in the same quarter last year.
The company, which keeps its books in U.S. dollars, says the profit amounted to 23 cents per diluted share for the quarter ended June 30 compared with 20 cents per share a year ago.
Revenue for the quarter totalled US$2.89 billion, down from US$3.06 billion in the second quarter last year.
Gold production in the quarter was 1,041,000 ounces, down from 1,101,000 in the same quarter last year, while its average realized gold price rose to US$1,820 an ounce compared with US$1,777 a year ago.
On an adjusted basis, Barrick says it earned 29 cents per share, the same as a year ago.
Analysts on average had expected an adjusted profit of 26 cents per share and US$2.99 billion in revenue for the quarter, according to financial data firm Refinitiv.
This report by The Canadian Press was first published Aug. 9, 2021.
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