Thursday, April 7, 2011

Newmont Mining Decides To Link Dividend To Gold Price

Not the price of gold itself, but the realized price of the gold it sells during each quarter. Perhaps recognizing that its stock is being held back because of a stingy dividend policy, the company is confident enough in its profit position to assume that costs can be controlled enough to make for a stable payout using realized price as a yardstick.
The annual payout will rise at a rate of 20 cents per share for each $100 per ounce increase in the average realized gold price. The current gold price of about $1,450 an ounce will mean Newmont's annual dividend would be $1.00.

"With our strong balance sheet and cash flow, we are positioned to fund profitable growth and to pay a new gold price-linked dividend," Chief Executive Richard O'Brien said in a regulatory filing before its investor day.
Newmont's stock is up a fair bit this morning, in part because of that change in dividend policy.

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