Barrick ups dividend, gold surges to two-week high

Barrick Gold's Turquoise Ridge mine in Nevada. Source: Barrick Gold Corp.

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Barrick Gold Corp. [ABX-TSX; GOLD-NYSE] on Thursday November 5 said it captured the benefit of higher gold prices in Q3 2020 by increasing its free cash flow by 151% from the previous quarter to a record US$1.3 billion.

The announcement came as the price of gold surged to a two-week high of US$1,948.40/oz, a move that analysts said is driven by expectations that if Joe Biden wins the U.S. election, his government would likely enact large stimulus measures that would be expected to weaken the U.S. dollar.

The gold mining giant also reported a net profit of US$882 million or 50 cents a share in Q3 ended September 30, 2020, and realized an average of US$1,926/oz for its gold production. Adjusted net earnings per share jumped 78% from the prior quarter to 41 cents.

The company also announced a 13% increase to its quarterly dividend to $0.09 per share from $0.08.

Barrick shares advanced on the news, rising 7.3% or $2.59 to $38.27 on volume of 3.64 million. The shares are currently trading in a 52-week range of $41.09 and $17.52.

“As today’s results show, in the face of unprecedented challenges we have succeeded in beating our earnings consensus, reinforcing our 10-year plan and capitalizing on the gold price to maintain an industry-leading balance sheet,” said Barrick President and CEO Mark Bristow.

“Our year-to-date production of 3.6 million ounces keeps Barrick on track to achieve our guidance of between 4.6 and 5.0 million ounces for the year,” he said.

Of the group’s capital projects for the assets it operates, on Veladero’s cross-Andean powerline and phase six expansion were stalled as a result of Argentina’s COVID-19 response and further complicated by the onset of winter. Those projects are now restarted.

Two years ago, Barrick consolidated its position as one of the world’s leading gold producers by agreeing to merge with Randgold Resources. Barrick said the rationale for the transaction was to create an “industry-leading” gold company holding 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).

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