Bristow foresees new Barrick payout policy once net debt removed, possibly at year-end

BARRICK Gold would stick to an “affordable” dividend, but would consider adjusting its payout policy once it had rubbed out net debt, said CEO Mark Bristow.

At current gold pricing, the company would have net debt of no more than $500m by year-end and possibly become net cash if more non-core asset sales were completed, he said.

“Then we would have reset the business and we can maybe start paying out a ratio. We are paying an affordable dividend but we will revisit it; some sort of ratio of income.”

Debt net of cash was reduced by almost 25% to $1.4bn from the end of the first quarter by the close of the second, Barrick said on Monday. It also announced a 14% increase in the quarterly dividend to eight US cents per share – double the payout following the completion of the Barrick merger with Randgold Resources, Bristow’s former company.

“At Randgold we paid an increasing dividend for 13 years which was built on a solid business. We have got a 10-year business plan that works at $1,200/oz. We don’t have to build any new mines to keep 4.8 to five million ounces in production [a year],” he said.

Shares in Barrick took a knock on Tuesday after gold sank below $2,000/oz, a level it breached seven days ago. Gold’s retreat was owing to Covid-19 vaccine optimism and signs that monetary stimulus was having a positive effect on world economies.

However, Bristow said that whilst volatility would be a feature of the gold market the price of the metal had been repositioned.

“People don’t want to see a high gold price because it is recognition of a high speed collision,” he said of Covid-19 and the impact on money through stimulus efforts. “Sure, gold will peak but not everyone understands the damage has been done.

“US equities, such as Amazon, have had some good results. But other companies have produced good results on furloughs and re-shaping. The hidden part of the crisis is still to come through.

The gold price won’t settle back to $1,100 or $1,200/oz. It will settle at a new base as all economies are printing money. It has devalued money and gold manages that.”