TORONTO—Barrick Gold Corp. is selling off some of its mines and cutting its dividend as it works to transform itself into a leaner, more profitable company amid the plummeting price of bullion.
“This is not only about reducing debt,” co-president Kelvin Dushnisky told investors during an Aug. 6 conference call. “We want a portfolio focused on high quality gold assets and growth projects in our core regions of the Americas.”
The Toronto-based gold miner said it will now target spending cuts across its operations at $2 billion before the end of 2016—double what it had previously announced.
The company said the reductions will come out of its operating expenses, capital spending an corporate overhead and will position it to deliver stronger earnings when gold prices recover.
Barrick, which also reported a second-quarter loss, said it has already identified $1.4 billion of potential cuts across the business.
The company also announced a streaming agreement with Royal Gold, related to Barrick’s 60 per cent stake in the Pueblo Viejo mine in the Dominican Republic.
Dushnisky said the deal will “strengthen the balance sheet in the short term while preserving material exposure to higher gold and silver prices in the future.”
Under the agreement, Barrick will sell a portion of the gold and silver produced at the mine to Royal Gold, in exchange for a $610-million upfront payment as well as ongoing cash payments.
Barrick reported a net loss of $9 million, or one cent per share, compared to a loss of $269 million, or 23 cents, in the same period a year earlier. Sales dropped to $2.23 billion from $2.46 billion.
Barrick said it will slash its dividend by 60 per cent to two cents per share from the current five cents per share.
The company said it’s also considering a number of expressions of interest for the purchase of its non-core assets in Nevada and Montana as it anticipates further weakness in the price of gold during the last half of this year.
Gold bullion has lost roughly 40 per cent of its value since 2011, which has left miners scrambling to reduce how much they spend to produce each ounce of the precious metal.
December gold futures closed Thursday at US$1,090.10 an ounce, up $4.50 from the previous day’s close.
Some experts say gold’s value may drop further if, as many expect, the U.S. Federal Reserve hikes interest rates this fall. That could prompt investors to ditch safe havens like gold in favour of U.S. dollars.