Strengthening balance sheets
Not many investors were concerned about gold miners’ (GDX) (GDXJ) financial health when precious metal prices were high. However, as prices started falling, their focus shifted to low-leverage miners from high-leverage miners.
Improving financial profiles
Barrick Gold’s (GOLD) total debt fell 11% in 2018 to $5.74 billion. The company has made it clear that with a stronger balance sheet materially, it doesn’t intend to sell any more assets to pay its debt.
Newmont Mining’s (NEM) net debt also reduced considerably from $1.9 billion at the end of 2016 to $0.9 billion at the end of 2018. Its net debt-to-adjusted EBITDA multiple was 0.3x at the end of the fourth quarter compared to 0.7x at the end of the second quarter of 2017. The improvement was the result of an EBITDA improvement and a net debt reduction.
Strong financial position
Goldcorp’s (GG) balance sheet also remains strong. At the end of 2018, Goldcorp’s adjusted net debt totaled $2.5 billion. After its merger with Newmont Mining, the combined company’s financial position is expected to be solid.
Kinross Gold’s (KGC) financial strength and ability to invest in the future remains strong as it executes on five projects and advances three additional development opportunities. It has repaid more than $1 billion over the past six years.
In the next article, we’ll look at gold miners’ liquidity profiles and see what we can learn from them.