Ratings agency Moody's Investors Service has upgraded the senior unsecured ratings of Barrick Gold Corp and its rated subsidiaries to Baa1 from Baa2, with a stable outlook.

Moody's notes in a statement that Barrick's credit profile benefits from its low adjusted leverage, its large scale, its diverse and low-cost gold assets and its record of positive cash flow generation and "excellent liquidity".

"Barrick's liquidity is excellent, which provides significant flexibility to maneuver through gold price volatility. Barrick has $8.7-billion in liquidity sources over the next 12 months with no meaningful uses during this period. Sources consist of cash of $3.7-billion as at June 2020, an undrawn $3-billion revolver and expected positive free cash flow generation of about $2-billion at a $1 700/oz gold price sensitivity for the remainder of 2020 and $1 400/oz for 2021.

"Maturities are minimal with less than $10-million in debt due over the next year. Barrick's credit facility has financials covenants including maintenance of net debt to total capitalisation of less than 60%. Barrick's net debt to total capitalisation was 4% as at June 30, and we expect ample headroom to be maintained.

"The stable outlook reflects Barrick's ability to maintain production on a competitive all-in cost basis, continue to be free cash flow generative and that Barrick will continue to manage its free cash flow to balance between investments and shareholder returns in order to maintain credit metrics in-line with Baa1 rating," Moody's states.

Barrick executive VP and CFO Graham Shuttleworth comments that the upgrade reflects the significant progress that Barrick has made in strengthening its balance sheet since the merger with Randgold Resources.

"The improvements that we’ve made to our operations, combined with increased gold prices, have led to the generation of strong operating and free cash flows, enhanced liquidity and a reduction in net debt and we expect to continue to build on these achievements going forward,” he notes.