Moody’s downgrades Barrick credit to lowest investment grade rating – by Rachele Younglai (Globe and Mail – August 13, 2015)

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Moody’s Investors Service downgraded Barrick Gold Corp.’s credit to the lowest investment grade rating, a blow to the company that is on track to reduce its debt by $3-billion (U.S.) this year.

Barrick is rapidly selling mines to reduce its $13-billion debt load. But Moody’s said Barrick’s debt is still too high given the weak gold price.

“Material organic debt reduction is unlikely and production will start declining in the next several years,” Darren Kirk, Moody’s senior credit officer, said in a statement announcing the downgrade.

Moody’s changed the miner’s outlook to “stable” from “negative” and downgraded Barrick’s debt to one notch above junk status, a risky rating that would increase the company’s borrowing costs.

A spokesman for Barrick said the company had made significant progress in reducing debt this year and said further cost reductions would strengthen the miner’s resilience amid low gold prices.

Barrick incurred much of its debt from an ill-timed copper acquisition in 2011 and a bungled attempt to build a gold and silver mine on an Andean mountain.

The copper deal has been written down and the Andean project has been suspended.

With the precious metal price trading around $1,100 an ounce, down 40 per cent over four years, Barrick and the rest of the gold industry have been racing to shore up their finances.

In addition to selling assets, Barrick reduced its dividend again.

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