Soaring bullion gives Barrick a record cash flow and shareholders another dividend hike
The world’s second-largest gold producer spun out $1.3bn of free cash flow in the third quarter, leading it to raise its dividend almost 13%
Toronto — Skyrocketing bullion prices have helped Barrick Gold generate record amounts of cash — and shareholders are getting rewarded with another dividend hike.
The world’s second-largest gold producer spun out $1.3bn of free cash flow in the third quarter, prompting the company to hike its quarterly payout for a third time in the past year. Barrick reported quarterly earnings and revenue that topped analysts’ estimates on Thursday, as surging bullion prices helped offset the impacts of the coronavirus pandemic on its business.
“In the face of unprecedented challenges we have succeeded in beating our earnings consensus, reinforcing our 10-year plan and capitalising on the gold price to maintain an industry-leading balance sheet,” CEO Mark Bristow said in the company’s earnings report.
Gold surged to record heights above $2,000/oz in August, helping lift miners’ fortunes. Barrick raised its dividend almost 13% to 9c a share, joining rivals Newmont, AngloGold Ashanti and Agnico Eagle Mines in boosting quarterly payouts. Barrick’s dividend has doubled since mid-2019.
Bristow said the 9c dividend is “sustainable” and the company still plans to announce a new policy for returning capital to shareholders next year. “At the same time, I’m more conservative than most,” Bristow said. “I’ve always been like that.”
Barrick also reduced its debt net of cash by 71% to $417m, and the company said it has no significant maturities until 2033.
Barrick rose 2.9% to $28.21 at 8am in early US trading. By Wednesday’s close in New York, the shares had climbed 48% in 2020, tracking the gains of a Bloomberg Intelligence index of senior gold miners.
Barrick reported adjusted earnings of 41c a share in the third quarter, beating the 33c average estimate of 18 analysts in a Bloomberg survey. Revenue jumped 32% to $3.54bn, the highest since Barrick completed its merger with Randgold Resources in January 2019.
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