North American gold miner Goldcorp “has stood alone among gold miners” in increasing production and earnings without adding large amounts of debt, says Standard & Poor’s analysts.
RENO (MINEWEB) – In spite of favorable gold prices and strong operating cash flow, Standard & Poor’s analysts have been unhappy with gold producers’ rising costs and higher debt burdens.
In an analysis published Tuesday, S&P Credit Analysts Donald Marleau and George Economou observed, “Rating pressure is emerging in the gold mining industry as companies struggle to boost returns, despite the long-standing run of gold prices.”
“In fact, some of these companies are taking on unprecedented levels of debt to fund large, risky investments or acquisitions to increase—or even merely sustain—gold output,” they said.
Of the four North American gold companies reviewed by S&P, Goldcorp’s “track record of growing output, lower costs, and stable debt compares favorably with its larger, more diverse ‘BBB+’ rated peers Barrick and Newmont,” said S&P, “Moreover, the company’s ‘modest’ financial risk profile acts as a considerable buffer against potential shocks, such as unstable prices and costs or sudden spikes in capital spending needs.”