Barrick CEO vows to stick to capital strategy as gold prices boost Q2 profits

TORONTO — The chief executive of Barrick Gold Corp. said Monday the company's strategy for spending money is unchanged despite a run up in gold prices that boosted second-quarter results and prompted an increased dividend.

Mark Bristow said he is actively guarding against temptation to change course.

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"First of all, the way you do it, is you don't blow your brains out, like what happened to the industry in 2010 to 2015," he said in response to an analyst's question about the company's discipline.

"We still allocate capital at US$1,200 (per ounce). The budget number is only for us to forecast revenues. ... What is happening today is fast-forwarding the Barrick strategy."

Despite reaching its target of selling US$1.5 billion in non-core assets after its merger with Randgold announced in the fall of 2018, Barrick is continuing to field offers and is finding increased interest in its smaller assets because of the high gold price, Bristow said.

In Toronto, Barrick's shares rose by as much as 3.6 per cent to $39.93 on Monday before falling to $38.84, up 0.7 per cent, at about 1 p.m. EDT.

The miner, which keeps its books in U.S. dollars, reported a second-quarter profit of US$357 million, up from US$194 million in the same quarter last year, as revenue reached US$3.06 billion, up from US$2.06 billion a year ago.

Barrick also announced an increase in its quarterly dividend by 14 per cent to eight cents per share.

The company's realized gold price rose by 30 per cent to US$1,725 per ounce, up from US$1,317 in the same quarter last year.

On an adjusted basis, Barrick earned 23 cents per share for the quarter, versus nine cents per share a year ago, and ahead of analyst expectations of 19 cents per share according to financial markets data firm Refinitiv.

In a note, National Bank analyst Mike Parkin attributed the earnings beat to higher-than-expected realized prices for gold and copper.

The results came despite production interruptions caused by the COVID-19 pandemic, especially at Barrick's Veladero mine in Argentina where a nationwide quarantine and severe winter weather delayed work on a leach pad expansion and powerline project.

Production is running below guidance at higher costs per ounce and, due to ongoing pandemic-related restrictions, remains at 85 per cent of capacity, Bristow said.

He warned that the novel coronavirus still poses a major risk for the company's mining operations around the world going forward, noting that Barrick recently tested its entire workforce at the Kibali mine in the Democratic Republic of Congo for COVID-19.

"The big thing now is settling down our operations," he said.

"Our biggest challenge is constantly reminding the communities and our host countries and state governments that COVID is still there ... we need to maintain proper discipline protocols."

Barrick said it is on track to achieve annual production within its 2020 guidance range.

It said second-quarter results show year-to-date gold production of 2.4 million ounces, the mid-point of its 4.6 million to five million ounce annual guidance.

Copper production in the second quarter was 120 million pounds, up from 97 million in the year-earlier period.

By Dan Healing in Calgary

This report by The Canadian Press was first published Aug. 10, 2020.

Companies in this story: (TSX:ABX)

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