Barrick declares US$1 billion buyback plan
Barrick Gold Corp.’s [ABX-TSX, GOLD-NYSE] said Wednesday it’s board of directors has approved a share buyback of up to US$1 billion in the belief that its share are trading in a price range that does not reflect the company’s mining and financial assets.
After raising its fourth quarter dividend by 11% to 10 cents per share, the gold mining giant is deploying a new dividend policy that is linked to net cash on the balance sheet.
The move comes after the company achieved its production targets for the third consecutive year, producing 4.43 million ounces of gold at an all-in-sustaining cost (AISC) of US$1,026 an ounce. The company also produced 415 million pounds of copper in 2021 at an AISC of US$2.62 per pound.
Annual gold production was down 6.8% from 4.76 million ounces in 2020. Copper production was also down from 457 million pounds in 2020.
Barrick’s adjusted earnings per share in the fourth quarter of 2021 came in a $0.35, ahead of analysts estimates of $0.30.
“Our strong performance and financial strength has allowed us to further increase our base quarterly dividend and provide our shareholders with guidance on additional performance dividends going forward,” said Graham Shuttleworth, Barrick’s Senior Executive Vice-President and Chief Financial Officer.
“We believe that the shares are trading in a price range that does not reflect the value of the company’s mining and financial assets and future business prospects,” added Barrick CEO Mark Bristow. “We have the financial strength to undertake this program.
On February 15, 2022, Barrick Gold shares closed at $26.33 and now trade in a 52-week range of $30.65 and $22.30.
Barrick has gold and copper mining operations and projects in 13 countries in North and South America, Africa, Papua New Guinea and Saudi Arabia.
The portfolio includes half of the world’s top 10 tier one gold assets (defined as having a mine life of over 10 years, at least 500,000 ounces of annual production and in the bottom half of global total cash costs).
They include Cortez and Goldstrike in Nevada, Kibali in the Democratic Republic of Congo, Loulo-Gounkoto in Mali, and Pueblo Viejo in the Dominican Republic.
Barrick said has set a gold production guidance range of 4.2-4.6 million ounces for 2022 at an AISC of between US$1,040 and US$1,120 per ounce. The company expects to produce 420-470 million pounds of copper this year at an AISC of US$2.70-US$3.00 a pound.
Meanwhile, the company said free cash flow from operations remained robust at year’s end when net cash stood at US$130 million after a record cash distribution of US$1.4 billion to shareholders.
Speaking at a results presentation, Bristow said three years after the Rangold merger, Barrick is clearly achieving its goal of industry-leading valuation and sustainable profitability. “All our mines have 10-year business plans, based not on wishful thinking but on geological understanding, engineering and commercial reality,” he said.