Higher Gold Prices Boost Cash Flows
New York, NY — Newmont Mining Corp (NYSE:NEM), the world’s second largest gold miner by market value, may increase its quarterly dividend later this year as bullion prices jump.
“It’s certainly worth noting that if today’s gold price is maintained, our gold price-linked dividend would double in the third quarter,” Chief Financial Officer Laurie Brlas said on a conference call with analysts on July 21. “We do plan to reassess the dividend pay-out later this year, as we go through our 2017 business planning process, and would expect to be able to adjust it given our strong cash performance.” (Source: “Miner Newmont hints at dividend increase as bullion prices soar,” Reuters, July 21, 2016.)
Newmont Mining declared a quarterly dividend of $0.025 per share of common stock. Newmont’s gold price-linked dividend policy includes a quarterly dividend payable based on the average LBMA P.M. gold price for the preceding quarter.
The policy recommends an annual dividend of $0.10 per share or $0.025 per quarter at a gold price of up to $1,300 per ounce and an annual dividend of $0.20 per share or $0.05 per quarter at a gold price between $1,300 and $1,399 per ounce.
For each $100.00-per-ounce increase in the gold price above $1,399 per ounce, the annual payout increases at a rate of $0.20 per share or $0.05 per quarter. (Source: “Newmont Declares Quarterly Dividend,” Newmont Newsroom, July 20, 2016). Newmont production will review its gold price-linked dividend at an October board meeting.
“Newmont Mining reported GAAP net income attributable to shareholders from continuing operations of $50.0 million, or $0.09 per share, compared to $63.0 million, or $0.13 per share, in the prior-year quarter and achieved adjusted net income of $231 million, or $0.44 per basic share, compared to $131 million, or $0.26 per share, in the prior-year quarter.”
The spot price of gold was $1,323, up from $1,060.24 at the start of 2016 as investors seek a safe haven during increasing geopolitical uncertainty and declining real interest rates.
Newmont Chief Executive Gary Goldberg said the board of directors will weigh the use of cash for debt reduction, project investment, and shareholder returns. Increasing the dividend is preferable to share buybacks, he added. (Source: Ibid.)