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Gold at US$1,500 is 'very achievable': Barrick president

The president of the world’s largest gold producer says the US$1,500 per ounce call from a recent HSBC report is “very achievable,” as the precious metal enters the early stages of a new bull market.

“I think the fundamentals are really going to show support for the gold price,” said Barrick Gold Corp.’s (ABX.TO) Kelvin Dushnisky in an interview with BNN.

Gold futures rallied Thursday as mounting concerns about the stability of global markets and low inflation tapered expectations that the U.S. Federal Reserve will raise its key lending rate in March.

Dushnisky expects volatility in the bullion price to persist in the near-term, but says over the next year, declining production around the world and ongoing geopolitical tensions will push the yellow metal higher.

“In addition to that, we see more buying in China, India, and inflows in the ETF which we haven’t seen in a little while,” he said. “The $1,500 gold price that HSBC has, I think is very achievable.”

Dushinksky told investors on Barrick’s fourth quarter earnings call Thursday that he intends to structure operations to be sustainable “at virtually any foreseeable gold price.” He says Barrick’s $831 per ounce all-in sustaining cost is the lowest among senior gold companies.

Barrick plans to continue its efforts to rapidly shore up its balance sheet. The company reduced its total debt by $3.1 billion to $10-billion in last year, with plans to pay down another $2 billion in 2016.

“We’ve been clear that we want to strengthen our balance sheet further. The market has responded well to that last year. We believe they will again this year,” said Dushnisky.

At the same time, the company is looking to streamline its portfolio of mines by selling non-core assets and creating more joint venture partnerships.

Dushnisky says Barrick is not sacrificing production growth, despite the focus on deleveraging the books.

“We have organic growth around our existing mines and we are going to progress those moving forward. We are not putting that project development at risk. We will be able to achieve both,” he said. “We will grow over time, but we we’ll focus on free-cash-flow and margin growth, not just on production for production sake.”

Barrick expects to produce 5 million to 5.5 million ounces of gold in 2016, compared with 6.12 million last year.

Gold gained 1.84 percent Thursday to US$1,233.60 per ounce.

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