The head of Newmont Mining Corp, the world's No 2 gold producer, said on Tuesday the price of gold could top $2 000/oz, which would benefit Newmont shareholders whose dividends are linked to the price of the precious metal.
"Up is good," CE Richard O'Brien told participants at the Denver Gold Forum, as the gold price rose toward six-month highs above $1 700/oz.
Noting that Newmont's current yearly dividend of $1.40 a share represented a 3% yield based on the gold price, O'Brien said that at $1 800/oz, the dividend would be around $2 per share, or a 4% yield.
"And at $2 000, which is not unreasonable, the dividend would be $2.70 a share, which is a 5.4% yield," he said.
Gold has never reached $2 000. On September 6 last year, it reached an all-time high of $1 920.30/oz.
"If the price goes up, I think you will see us outperform the entire sector," O'Brien told the industry conference in Denver. His comments were webcast and monitored in New York.
Spot gold was up 0.4% at $1 731.20/oz in New York on Tuesday. The price has risen 2.5% this month to its highest level in six months.
Newmont's stock was up 1.5% at $52.14 in afternoon trading on the New York Stock Exchange.
Newmont introduced its gold price-linked dividend policy last year to attract investors, who are often more interested in buying physical gold than shares in the companies that mine it.
In July, Denver-based Newmont announced a quarterly dividend of 35c per share, payable on September 28. That represents an annualized dividend of $1.40 per share.