By Arundhati Sarkar
(Reuters) – Barrick Gold Corp posted a nearly 55% rise in quarterly profit on Wednesday as gold prices surged, bolstering its ability to snap up mines including in copper, its chief executive said.
Concerns about the health of the global economy due to the coronavirus pandemic have boosted “safe-haven” gold by 12% so far this year, while copper, seen as a bellwether for economic health, is down about 15%.
Barrick CEO Mark Bristow has previously said the world’s No. 2 gold miner could raise its exposure in copper because of its expected higher use in electrification.
He added on Wednesday the relative price performance between copper and gold made deals more attractive.
“(A stronger balance sheet) improves our capacity to take up opportunities that might arise in the short to medium term given the dynamic nature of the global economy,” Bristow told Reuters.
He did not elaborate, but has expressed an interest in acquiring Freeport-McMoran Inc’s flagship Grasberg mine.
Barrick, which maintained its quarterly dividend of 7 cents per share, trimmed its annual production forecast for gold after shutting its mine in Papua New Guinea.
The Canadian miner now expects attributable gold production of 4.6-5.0 million ounces versus 4.8-5.2 million previously.
The government of Papua New Guinea announced in April it would not renew a 20-year special mining lease for the Porgera gold mine, which is jointly owned by Barrick and China’s Zijin Mining, due to environmental damage and social unrest.
Barrick (Niugini) Limited, the local venture in which both miners have a 47.5% stake, had produced about 597,000 ounces of gold in 2019 from the Porgera mine.
Barrick has said it will contest the move, which it regards as “tantamount to nationalization without due process”, and in the meantime has placed Porgera on temporary care and maintenance, while suspending 2020 guidance for the mine.
Bristow said a mediator would be appointed to help negotiations if initial talks between the government and Barrick failed.
The company, with operations in North and South America and Africa, has not closed any of its mines due to coronavirus restrictions which have hit competitors.
Larger rival Newmont, which was forced to shutter some mines in Canada and South America, warned on Tuesday of a financial hit in the second quarter.
Barrick’s first quarter production fell 9% to 1.25 million ounces. Excluding one-off items, Barrick reported a profit of 16 cents per share, in line with analyst estimates.
(Reporting by Arundhati Sarkar in Bengaluru, Zandi Shabalala in London and Helen Reid in Johannesburg; Editing by Krishna Chandra Eluri and Mark Potter)