Stockholders’ obsession with quick profits is undermining the gold industry’s ability to grow, complains the chief executive of Barrick Gold Corporation, the world’s second-largest miner of gold.
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“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,” said Barrick CEO and President Mark Bristow in the company’s first-quarter earnings release, a rare rebuke to some of his company’s large shareholders. “Barrick is building a business for the long term and our focus remains firmly on the future and on the creation and delivery of long-term value to our shareholders,” he added.
Barrick delivered a 78 percent jump in first quarter profit, handily topping Wall Street’s estimates with adjusted earnings hitting $507 million. The company said it is well on target to meeting its annual earnings guidance for the year.
But Bristow complained that doesn’t seem to be enough for Wall Street money managers. “Fund managers just bash the table and want money—they’re not interested in the industry reinforcing its foundations,” the Barrick CEO told Bloomberg News. He is urging shareholders to take a long view, especially since mining companies face challenges in accessing increasingly difficult-to-reach gold as they deal with tougher environmental standards.
“The real tension is between fund managers wanting to take out and get more from investments in the mining industry generally and the importance of reinvesting in a consumptive industry,” Bristow said. “Our industry hasn’t invested in its future. It’s always been floated by the rise in gold price since the turn of the century.”
Barrick pays shareholders a quarterly dividend of 9 cents per share, which as of early May resulted in a yield of 2.4 percent, well above that of the Standard and Poor’s 500.
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