Kelvin Dushnisky, the President of Barrick Gold Corporation (USA)(NYSE:ABX) said that the company is ready with a road map to avoid falling into junk credit-rating status as it extends cost-cutting measures, partnerships and asset sales. The President confirmed that the miner firm has completed 90% of its $3 billion debt-reduction plan. They will continue to reduce headcount with a high level of interest for six mining assets sale in the U.S. On dividend front, the company do not plans any elimination of payout in near term.
The measures
The President of Barrick is striving to lower costs and boost productivity after gold prices declined more than 40% from their 2011 peak, sending bond yields soaring and company’s shares plummeting. As of now, the company has lowest investment grade by Moody’s Investors and Standard & Poor’s Service. Here, it is important to highlight that both the firms have stable outlook on the company.
Dushnisky, when asked about the risk of falling into junk status, said that he is not concerned. The company has been extremely clear about the objectives. In fact, they received positive feedback from company’s shareholders on the same issue. They have been moving on the path as planned.
Declining prices
Barrick’s bonds worth $1.5 billion due 2023 have declined to 89 cents compared to 97 cents on the dollar at the end of 2014. That pushed up bond yields to 6.2% last week, extending the gap with an index of debt offered by materials firms to the widest in last two years. Teck Resources Ltd (USA)(NYSE:TCK) lost its Moody’s investment-grade rating as declining commodities prices overshadowed cost-cutting measures.
Dushnisky said that they intend to focus on cutting operating costs. It is where they see a lot more room to achieve. Barrick has already cut down the number of employees in Toronto to 150 from 370 workers in 2013.
