VANCOUVER (miningweekly.com) – Canada’s Barrick Gold on Thursday announced the sale of half of its Veladero mine for $960-million, a move seen as credit positive for analysts at Moody’s Investors Service.

"Barrick’s announced sale of half of its Veladero mine is credit positive because we expect some portions of the proceeds will be used to reduce debt given the company's debt reduction targets. Also, Barrick's plans to possibly jointly develop Pascua-Lama will reduce execution risk associated with the project, should Barrick proceed with its construction,” Moody’s VP and senior analyst Jamie Koutsoukis said in a statement to Mining Weekly Online.

According to Moody’s, the sale provides Barrick with funds that it can apply toward its target $2.9-billion of debt reduction by the end of 2018. Though the company will see production and earnings before interest, taxes, depreciation and amortisation reduced by the loss of half of Veladero's output, the agency expects Barrick's adjusted leverage will remain near 2x in 2017 and 2018 (2x at December 2016), but would fall below that level should the company execute its planned debt reduction.

Veladero produced 544 000 oz of gold in 2016 with cash costs at $582/oz.

Additionally, execution risk associated with the possible development of Pascua-Lama by Barrick is reduced by the potential joint development with Shandong. The amount of capital needed to be spent by Barrick during development may be halved, and any possible construction delays, or mine disruptions would be weathered by both companies.

Barrick completed a detailed review of multiple development options for Pascua-Lama in 2016, both openpit and underground, and has initiated a prefeasibility study to evaluate the construction of an underground mine at Lama, the Argentinean side of the project.

Estimated capital costs for the project are not yet available.

The announcement is somewhat similar to the arrangement announced last week where Barrick and Goldcorp agreed to form a joint venture to advance mining projects around the Cerro Casale project, in northern Chile.

Barrick is one of the world's largest gold producers and it has a good position in copper. Barrick produced 5.5-million attributable ounces of gold in 2016 and Moody’s expects 2017 attributable production to reach about 5.7-million ounces. Revenues for 2016 were $8.6-billion.