Why Barrick Gold Is Comfortably Placed To Pay Off Maturing Debt Over The Next Few Years

September 20th, 2016 by Trefis Team

Barrick Gold (NYSE:ABX) has been on a mission to strengthen its balance sheet over the past couple of years, with a decline in gold prices prompting the company to take steps to lower its debt. Barrick Gold lowered its debt by around $3 billion in 2015 and has further lowered it by close to $1 billion in the first half of 2016. [1] As a result of the proactive steps taken by the company and a recovery in gold prices this year, the company is now well placed to meet its maturing debt obligations over the next four years. This is illustrated by the table shown below, which demonstrates that the company’s cash flows are more than sufficient to pay off maturing debt.

ABX Well Placed To Service Debt Obligations

A sharp increase in the investment demand for gold in the wake of the UK’s June 23 EU referendum has driven up gold prices in 2016. Moreover, macroeconomic uncertainty and a subdued global economic environment are likely to preclude a sharp interest rate hike by the Fed in the near term, further supporting gold prices. The improved gold pricing outlook, as illustrated by our forecast shown below, will drive the company’s cash flows in the coming years. With the company’s robust cash flows more than sufficient to pay off maturing debt, Barrick is comfortably placed to meet its debt obligations in the medium term.

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Have more questions about Barrick Gold? See the links below.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Barrick Gold

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Notes:
  1. Barrick Gold’s Q2 2016 Earnings Call Transcript, Seeking Alpha [↩]