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Aug 10, 2020

Barrick boosts dividend by 14% with windfall from gold's rally

Barrick Gold raises dividend

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The torrent of pandemic-relief money likely means a higher floor price for bullion, according to Barrick Gold Corp. But that doesn’t mean the world’s second-largest producer will be taking a more aggressive approach.

Chief Executive Officer Mark Bristow said gold probably has some room to go higher on a real-dollar basis, but the company will continue to make decisions based on a long-term price of US$1,200 an ounce. Gold has shot past the all-time record set in September 2011 in the past month and is trading above US$2,000 an ounce.

The “base price of gold” is definitely going to rise, Bristow said Monday in a telephone interview. “What is that number? I can’t tell you. But it’s below the current gold price, I’m sure.”

Barrick said in its second-quarter earnings statement that it will increase its quarterly cash dividend 14 per cent to 8 cents a share. Strong cash generation shows the quality of Barrick’s assets and its ability to capture the full benefit of higher prices, it said. Barrick rose 0.7 per cent to US$29.07 at 12:36 p.m. in New York. The shares have climbed 56 per cent this year.

Asked in if Canada-based Barrick had any intentions to move its primary listing to New York or London, Bristow said “we are very happy where we are in Canada.” In a follow-up email, a spokeswoman said Barrick considers its Toronto and New York listings to be “equally weighted,” while the company remains headquartered in Toronto.

“Domiciling in the U.S. just to be able to get on the S&P; that’s a questionable decision,” the CEO said on the call.

Bristow said Barrick is “fully engaged” in trying to settle a dispute over its giant Porgera gold mine in Papua New Guinea. Earlier this year, the government said it wouldn’t renew the license. The current offer would see the benefits shared 57-43 in favor of Papua New Guinea, he said Monday.

“It’s the best deal that Papua New Guinea has in its resource base today,” Bristow said.

On the earnings call, Bristow said the company would continue to pursue deal-making, but its overall acquisition strategy won’t change because of higher prices. Barrick still expects to shed some non-core assets but the value has obviously risen with gold prices, he said.

Other Results

  • Adjusted earnings came in at 23 cents a share versus the average analyst estimate of 18 cents.
  • All-in sustaining costs increased 8.1 per cent to US$1,031 an ounce in the second quarter from the previous three months amid precautions for the coronavirus.
  • Barrick reiterated it’s on track to meet its guidance for 2020 production estimated at a range of 4.6 million to 5 million ounces. That target was lowered in May in part because of a conflict with the government of Papua New Guinea over Porgera.

--With assistance from Alix Steel.