VANCOUVER (miningweekly.com) – The world’s largest gold producer Barrick Gold’s intensive corporate strategy to reduce debt and company-wide costs over the last several quarters has been paying off, with a second major credit ratings agency upgrading the miner's long-term corporate credit rating this month.
S&P Global Ratings announced on Thursday that it had upgraded Barrick’s long-term corporate credit rating to BBB from BBB-, with a stable outlook.
The news followed a similar upgrade by Moody’s Investors Service to Baa2 on March 1.
TSX- and NYSE-listed Barrick, which is based in Toronto, Ontario, has reduced its total debt by more than 50%, from $13.1-billion at the start of 2015, to $6.4-billion at the end of 2017.
S&P cited the “improvement in Barrick’s financial risk profile following sustained strength in the company’s earnings and cash flow over the past two years, alongside material debt repayment” as the basis for its decision. “Barrick’s cash cost position, estimated in the mid-$500/oz (net of by-product revenues) in 2018, is in the lower half of the industry cost curve and more advantageous than that of most of its closest competitors over the past few years,” S&P stated.
Barrick has recently confirmed its commitment to reduce total debt to about $5-billion by the end of 2018, mainly by using cash flow from operations and cash on hand, and potentially through further portfolio optimisation.
At the end of the fourth quarter, Barrick had a consolidated cash balance of about $2.2-billion, and less than $100-million in debt due before 2020. More than three-quarters of Barrick’s outstanding total debt of $6.4-billion does not mature until after 2032.