Barrick Gold Corporation ABX recently extended the termination date on the majority of its fully undrawn $4 billion revolving credit facility from Jan 2020 to Jan 2021. The company also amended the credit facility's key financial covenant.
About $3.6 billion of the $4 billion available under the credit facility will now terminate in Jan 2021, while the rest will end in Jan 2020. With regard to the extension of the termination date, Barrick proposed to amend the financial covenant that required it to maintain a minimum consolidated tangible net worth (CTNW) of at least $3 billion, which its lenders also agreed. The new covenant will better reflect Barrick's 2015 deleveraging measures and expected future debt reduction.
Per the amended covenant, Barrick will have to maintain a net debt to total capitalization ratio of less than 0.60 (as of Sep 30, 2015, it was about 0.42). Future debt cuts, including the anticipated completion of the recently announced debt tender offer of up to $1.15 billion, is expected to have a favorable impact on this ratio.
The shares of the company rose roughly 6.9% to close at $8.09 on Dec 4.
Barrick has announced asset sales, joint ventures and partnerships worth $3.2 billion since the beginning of this year. The company remains on track to meet its stated debt reduction target of $3 billion for 2015, which, once completed, will represent a 23% reduction in total debt since the beginning of 2015.
Barrick’s long-term debt was around $11.3 billion as of Sep 30, 2015, down from around $12.9 billion a year ago. The company reduced its total debt by 15% from $13.1 billion to $11.2 billion through the end of third-quarter 2015, thereby considerably lowering its near-term debt repayment obligations.
Barrick currently carries a Zacks Rank #3 (Hold).
Some better-ranked gold mining stocks are NovaGold Resources Inc. NG, Harmony Gold Mining Company Limited HMY and Richmont Mines Inc. RIC. While NovaGold sports a Zacks Rank #1 (Strong Buy), Harmony Gold and Richmont carry a Zacks Rank #2 (Buy).
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