Barrick’s Bristow criticises resurgence of market-plaguing short-termism
Mining News Pro - The rise in the gold price has prompted a resurgence of the short-termism which has plagued the market, with some investors focusing on short-term gains rather than sustainable growth, Barrick Gold CE Dr Mark Bristow said on Wednesday, when his company paid a quarterly dividend of 9c a share, on net earnings a share of 30c, for the three months to March 31. This will be topped up by a three-tranche return of capital distribution totalling $750-million through the course of the year, taking the per share yield based on yesterday’s closing share price to 3.5% for 2021.
Since the first quarter of 2019, Barrick, on a quarterly basis, has beaten consensus seven times and equalled it twice. The company’s solid start to the 2021 year has put it on track to achieve 2021 production targets, having generated 31% more copper revenue in quarter, when operational cash flow hit the $1.3-billion mark.
On the resurgence of short-term thinking, Bristow spoke of fund managers demanding “dividends, dividends, dividends” from an industry that needed to become more relevant through growth.
“This is about growing a pie, and with a bigger pie, you can share a lot more. But as everyone slices it up, you end up with nothing,” Bristow commented to Mining Weekly in a telephonic interview.
“This industry is a partnership between capital, labour and governments and our responsibility as the managers of businesses is to shepherd and brace that partnership to ensure that it’s optimal, and that it doesn’t exploit but does deliver value to the stakeholders – all of them,” said Bristow.
Barrick’s top-tier gold mines all delivered strong financial performances in quarter one. Net cash increased by $0.5-billion despite an advanced tax payment to the state of Nevada on the back of free cash flow of $0.8-billion.
“As I’ve been saying for years now, host countries are as important as investors because they’ve got to bring to the industry their mineral endowment, and we have a responsibility of delivering value in exchange, just as we have a responsibility to do the same with the capital we raise from the funds that invest in us,” said Bristow.
“This Covid pandemic has really, in my mind, created an abnormal, disproportionate, distorted global market, because the people who couldn’t afford to go without work were actually let loose, and the people who could afford to manage through this crisis, just ended up with a lot more money. This world is completely distorted. If you add up all the GDPs, you don’t get to the global debt, so something’s wrong because an accountant will tell you that’s not possible,” he said.
Barrick made the point in a media release that the industry as a whole was not replacing what it mined and that the real winners would be the companies who grew their businesses for the long-term, rather than focusing on short-term gain. The company elaborated further to say that it was extending its ten-year plans to 15 and even 20 years.
“Our industry hasn’t really invested in itself. We’ve demonstrated in the past two years that it’s important to consolidate and to grow and to remain relevant, and you can’t do that if people are demanding,” Bristow said.
In the years of 2011, 2012 and 2013, Randgold Resources, now merged into Barrick, became the premium gold play by avoiding short-termism and strengthening its balance sheet.
This enabled the company to walk into the merger with Barrick with its head held high. It is doing the same thing this time around. Barrick’s balance sheet is currently the strongest in the industry, augmented by realising $1.5-billion through the streamlining of its portfolio.
As the owner of five of the top ten gold producing operations in the world and with strong cashflows, no net debt and a ten-year plan based primarily on declared reserves and resources, Barrick’s focus remains firmly on the future and on the creation and delivery of long-term value to all stakeholders, Bristow emphasised.