Barrick Gold CEO and President Mark Bristow on why gold and precious metals have rallied in recent weeks.
Barrick Gold Corp. CEO Mark Bristow thinks Warren Buffett’s inaugural investment in Berkshire Hathaway is an “important step” for his gold mining company and the sector.
Berkshire announced a new 20.9 million stake in Barrick Gold, worth $ 564 million. The investment, announced late Friday, gives Berkshire a 1.18% stake in Barrick and makes it the 11th largest shareholder.
“It’s the ultimate privilege to have Berkshire Hathaway as an investor in one company and something I’ve been looking for,” Bristow told FOX Business exclusively. “We hope it’s not the end.”
News of the investment boosted shares of Barrick Gold on Monday by 12% to its highest level in more than 7 years. The stock has risen 62% this year.
| Ticker | Security | Last | Change | Change% |
|---|---|---|---|---|
| GOLD | BARRICK GOLD CORP. | 30.13 | +3.14 | + 11.63% |
| BRK.A | BERKSHIRE HATHAWAY INC. | 310,220.00 | -6,031.00 | -11.91% |
Berkshire’s interest in Toronto-based Barrick Gold comes despite both Buffett and his right-hand man Charlie Munger repeating over the years over their contempt for gold.
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In 2005, Buffett complained that gold was “something that grows from the ground up in Africa” and has “no use.”
Munger once said famous “civilized people do not buy” gold.
Warren Buffett (L), CEO of Berkshire Hathaway, and Vice President Charlie Munger
Source: JOHANNES EISELE / AFP via Getty Images
While Buffett’s team did not disclose the reason for their investment, it is possible that the decision was made by Todd Combs or Ted Weschler, investors who are potential successors to Berkshire.
Surveys by FOX Business to Buffett were not returned at the time of publication.
So what exactly does Berkshire buy?
Bristow, who has not spoken to Berkshire about the investment, said the Omaha-based conglomerate is investing in a miner that has the ‘best people who have the best assets’ and that its business goal is money. in all cycles and not have to “pray for the golden price” to increase to help turn a profit.
Barrick, in a move that reflected the strength of its business, last week raised its dividend by 14% to 8 cents a share. The dividend increase came as more than 180 companies cut their dividends and another 150 withdrew their payouts due to the uncertainty caused by COVID-19.
Barrick’s dividend ride certainly put a smile on Buffett’s face, as he has long expressed his love for stocks with reliable and sustainable payouts, something Bristow has delivered throughout his career.
Bristow’s former company, gold miner Randgold Resources, grew its dividend for 13 years, after never once cutting the payout. Randgold merged with Barrick in 2018, making him the second largest gold miner.
The 31% increase in gold prices this year has strengthened the founding of Barrick’s company, while reducing management risk, increasing cash flow and strengthening its balance sheet. That has enabled Bristow to ‘track’ its revised dividend policy, which will now be based on “some sort of ratio”, whether it is net income or cash flow, he said.
At the end of the second quarter, the board said it finds the dividend increase sustainable after reporting “total liquidity of $ 6.7 billion, including a cash balance of $ 3.7 billion.”
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‘We are very privileged to have them [Berkshire Hathaway] as an owner, and we feel the same way about everyone who buys our shares, ”Bristow said.
