Barrick beats forecasts, hikes dividend by 40% as gold prices soar

Barrick Gold’s chief executive, Mark Bristow (Image: Screenshot from Bloomberg Markets Interview | YouTube.)

Barrick Gold (TSX: ABX) (NYSE: GOLD) posted on Wednesday a better-than-expected quarterly profit and gave investors a welcome 40% dividend increase, thanks to strong gold prices.

The world’s second largest producer of the yellow metal said adjusted net earnings in the three months to December reached $300 million, or 17 cents a share, up from $264 million recorded in the previous quarter, or 15 cents a share. Analysts’ average estimate was 14 cents a share.

Gold prices increased about 18% last year, as investors sought safe-haven assets due to global uncertainty triggered by the long-drawn out trade war between the US and China

The results, along with Barrick halving its debt to $2.2 billion over the course of 2019, allowed the miner to declare a dividend of 7 cents a share, up from 5 cents in third quarter, payable on March 16.

“The board believes the dividend increase is justified by the significant reduction in net debt and strong balance sheet, together with the growth in free cash flow supported by a robust 5-year plan which we have shared with the market,” executive vice-president and chief financial officer, Graham Shuttleworth, said in a statement.

Gold prices increased about 18% last year, as investors sought safe-haven assets due to global uncertainty triggered by the long-drawn out trade war between the United States and China.

Barrick’s realized gold price in the three months to December jumped by 21% to $1,476 an ounce from $1,216 an ounce in the year-ago quarter, while average realized prices for copper remained at $2.76 per pound in Q4 2019.

Barrick has also benefited from the $1 billion fetched through asset sales since chief executive Mark Bristow took the helm in January 2019.

Eyes on copper

Full-year production, in turn, rose to 5.5 million ounces of gold, from 4.5 million ounces a year earlier. The miner churned out 432 million pounds of copper, a metal which the miner has set eyes on.

While Bristow denied last week the company was mulling a merger with Freeport-McMoran, he did say the miner’s Grasberg copper and gold operation in Indonesia was an attractive asset.

Last month, the company signed a deal with the Tanzanian government to formalize a joint venture related to the three mines Barrick has there, ending a long-running tax dispute with the African country.

For 2020, the gold giant forecasts consolidated production of between 4.8 million and 5.2 million ounces of gold at all-in sustaining costs (AISC) of $920-$970 per ounce, and 440 million to 500 pounds of copper at AISC of between $2.20 and $2.50 per pound.

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