Strengthening balance sheets
Investors are usually not concerned about gold miners’ (GDX) (GDXJ) financial health when precious metal prices are high. However, as prices start falling, their focus shifts to low-leverage miners that can weather lower prices more effectively.
Improving financial profiles
Barrick Gold (GOLD) has been focusing on paying down debt for the last few years. Its net debt at the end of Q1 2019 was $3.65 billion as compared to $12.9 billion at the start of 2015.
Newmont Mining’s (NEM) net debt also reduced considerably from $1.9 billion at the end of 2016 to $0.8 billion at the end of Q1 2019. Its net debt-to-adjusted EBITDA multiple was 0.21x at the end of the first 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
Agnico Eagle Mines’ (AEM) balance sheet also remains strong. At the end of Q1 2019, Agnico’s debt totaled $1.7 billion. In the past one year, the company has built up its debt from $1.4 billion to $1.7 billion due to advancement on its projects. Now, most of the projects have completed and AEM’s financial condition should improve further.
Kinross Gold’s (KGC) financial strength and ability to invest in its future projects also remains strong as it is executing on five projects and advances three additional development opportunities. It has repaid more than $1 billion over the past seven years.