Buffett’s investment, Berkshire Hathaway is the ‘ultimate privilege’: CEO of Barrick Gold

Barrick Gold Corp. CEO Mark Bristow believes Warren Buffett’s inaugural Berkshire Hathaway investment is a “milestone” for his gold mining company and industry.

Berkshire announced a new 20.9 million share stake in Barrick Gold, valued at $ 564 million. The investment, revealed Friday night, gives Berkshire a 1.18% stake in Barrick and makes it the 11th largest shareholder.

“It is the ultimate privilege to have Berkshire Hathaway as an investor in his company and something that I aspire to,” Bristow exclusively told FOX Business. “We hope this is not the end.”

News of the investment sent Barrick Gold shares surging 12% on Monday to their highest level in more than 7 years. The title has gained 62% this year.

Berkshire’s stake in Toronto-based Barrick Gold comes despite the fact that Buffett and his right-hand man Charlie Munger over the years have repeatedly expressed their contempt for gold.

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In 2005, Buffett complained that gold was “something that is dug in the ground in Africa” ​​and has “no use”.

Munger once said that “civilized people don’t 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 have not disclosed the reason for their investment, it is possible that the decision was made by Todd Combs or Ted Weschler, investment managers who are potential successors to Berkshire.

FOX Business inquiries to Buffett have not been returned at time of posting.

So what exactly is Berkshire buying?

Bristow, who hasn’t told anyone in Berkshire about the investment, said the Omaha-based conglomerate was investing in a miner who had the “best people managing the best assets” and his company aimed to earn money. money in all cycles and did not. You don’t need to “pray that the price of gold” goes up to help it make a profit.

Barrick, in a move that showed the strength of its business, last week increased its dividend by 14% to 8 cents per share. The dividend increase came as more than 180 companies cut their dividends and another 150 suspended payments due to uncertainty caused by COVID-19.

Barrick’s dividend hike surely put a smile on Buffett’s face, as he has long expressed his love for stocks with reliable and sustainable payouts, which Bristow has achieved throughout his career.

Bristow’s predecessor, gold miner Randgold Resources, increased its dividend for 13 years, never cutting payment once. Randgold merged with Barrick in 2018, creating the second largest gold miner in the world.

Gold’s 31% surge this year has strengthened Barrick’s business base while reducing operational risk, increasing cash flow and strengthening its balance sheet. This has allowed Bristow to “step up” its revised dividend policy, which will now be based on “some sort of ratio” whether it’s net income or cash flow, he said.

At the end of the second quarter, the board said it believed the dividend increase was sustainable after declaring “total liquidity of $ 6.7 billion, including a cash balance of $ 3.7 billion. dollars “.

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“We are very privileged to have them [Berkshire Hathaway] as an owner, and we feel the same about whoever buys our stock, ”said Bristow.