Jul 31, 2008 (Dow Jones Commodities News via Comtex) -- DOW JONES NEWSWIRES

Barrick Gold Corp. (ABX) posted a 22% improvement in second-quarter earnings and stronger sales as higher gold prices offset an increase in cash costs.

The world's largest gold producer, which is based in Toronto, earned $485 million or 55 cents a share in the latest quarter, up from $396 million or 45 cents a year earlier. On an adjusted basis, earnings in the year-earlier quarter totaled $462 million or 54 cents a share.

The Thomson Reuters mean estimate was for earnings of 56 cents a share.

Sales rose to $1.97 billion from $1.64 billion a year earlier. The analyst mean estimate was for $2.11 billion.

Gold production in the quarter was 1.86 million ounces at a total cash cost of $417 an ounce, compared with 1.96 million ounces at a cash cost of $340 an ounce a year earlier. In the first quarter, Barrick produced 1.74 million ounces of gold at a cash cost of $393 an ounce.

Barrick said it expects higher gold production for the balance of the year, largely due to better grades at the Goldstrike operation.

Barrick's average realized gold price rose to $894 an ounce in the second quarter from $624 an ounce a year earlier, but was below the first-quarter average of $925.

Overall, the spot gold price averaged about $896 an ounce in the second quarter, down about 3% from record first-quarter levels.

Barrick's copper production fell to 87 million pounds from 101 million a year earlier, mainly due to lower leach recoveries at the Zaldivar mine. Its averaged realized copper price rose to $3.65 a pound from $3.43.

Barrick said it continues to be on track to meet its 2008 gold-production projection of 7.6 million to 8.1 million ounces, but now expects to come in near the lower end of the range. Citing higher assumed energy, gold and other consumables prices, it has boosted its cash-cost estimate for the year to $425-$445 an ounce from its previous view of $390-$415 an ounce.

It also maintained its copper-production projection at 380 million to 400 million pounds, but said it expects to also come in near the lower end of the range. Cash costs for copper are projected at $1.15-$1.25 a pound.

Rising oil prices have contributed significantly to skyrocketing operating costs in the mining sector.

In a bid to ease energy-cost pressures, Barrick recently agreed to acquire Cadence Energy Inc. (CDS.T), a junior oil and gas company. Barrick believes Cadence's production will provide a long-term economic hedge of about one-quarter of its annual direct oil consumption and a considerable portion of its natural gas consumption.

Earlier Thursday, Barrick also agreed to sell certain non-core royalties to Royal Gold Inc. (RGLD) in exchange for $150 million plus a significant reduction of royalties otherwise payable to Royal Gold on Barrick's Cortez property.

Barrick has raised its 2008 exploration budget to $225 million to reflect 100% ownership in Cortez and drilling success at a number of its exploration properties.

Shares of Barrick closed Toronto trading Wednesday at C$43.36, down 14 Canadian cents.

-Judy McKinnon; 416-306-2100; AskNewswires@dowjones.com