Metals Focus: Miners Debt Remains a Concern

The latest Precious Metals Weekly from Metals Focus provided a look at the performance of 10 major gold producers. The article noted that while miners have to some extent lowered their costs, the gold price has also fallen and debt for the miners remains a concern.

As quoted in the publication:

Outside of lower shareholder returns, one of the main causes of concern remains the volume of miners debt, which for the group totalled $27.6 billion at the end of Q1.15, up marginally q-o-q and only 2% below the level recorded at end-2013. Put into production terms, at end Q1.15 collective net debt equated to over $850/oz of annualised gold equivalent production, or over $40 per in-situ gold equivalent reserve ounce.

Given this high level of net debt, a number of major gold producers are trying to sell off their non-core assets to raise additional funds to pay down debt. Barrick for example, is aiming to reduce net debt by $3 billion in 2015; in May the company agreed to sell the Cowal mine (Australia) to Evolution Mining for $550 million, and entered into a strategic partnership with Chinese producer Zijin Mining, which as a first step will see Zijin acquire half of Barrick’s interest in the Porgera mine (PNG). Similarly, in the second half of 2014, Newmont sold its 44% stake in the Penmont JV (Mexico) to Fresnillo.

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