Barrick Gold tops forecasts and raises dividend as gold prices soar

Barrick Gold tops forecasts and raises dividend as gold prices soar Asset sales of $1bn over the past year helped lower debt at Toronto-based miner

https://www.ft.com/content/58738af8-4d95-11ea-95a0-43d18ec715f5?segmentid=acee4131-99c2-09d3-a635-873e61754ec6Barrick Gold announced a 40 per cent dividend increase on Wednesday as quarterly results topped expectations on the back of higher gold prices.

Barrick reported adjusted net earnings in the three months to the end of December of $300m, or 17 cents a share, up from $264m in the third quarter. Analysts had forecast earnings of 13 cents. That allowed the Toronto-based company to declare a dividend of 7 cents a share, up from 5 cents in the third quarter. Barrick said the payout was justified by growth in free cash flow and a significant reduction in net debt, which over the course of 2019 halved to $2.2bn.

Mr Bristow said he wanted to make the gold miner attractive to generalist investors by providing a steady yield. “When you buy physical gold you don’t get a yield but if you buy a well-run sustainably run gold mining company you should get a yield,” he told the Financial Times. The world’s second-largest gold miner has benefited from a rise in gold prices to a six-year high and $1bn in asset sales following Mr Bristow’s appointment to the top job in January 2019.

Mr Bristow has said he would like to expand the gold miner’s presence in copper, highlighting the Grasberg copper and gold mine in Indonesia owned by Freeport-McMoran as an attractive asset. Shares in Barrick Gold, which is listed in Toronto and New York, have risen by 37 per cent over the past 12 months, outperforming the gold price. They were little changed on Wednesday following the results statement, trading at C$24.58.

Analysts at RBC Capital Markets said the results were slightly disappointing, noting the earnings beat reflected a lower depreciation charge and Barrick generated less cash than expected because of higher capital spending and tax charges.

“We calculate fourth quarter free cashflow of $287m, $66m below our estimate of $353m,” the analysts said. Gold production rose to 5.5m ounces of gold, from 4.5m ounces a year earlier. Net debt fell by 46 per cent in 2019 to $2.2bn, Barrick said. Barrick said that it is considering an expansion of its Pueblo Viejo mine in the Dominican Republic, which will extend its life beyond 2040 at a production rate of 800,000 ounces of gold a year.