Photo by: Bloomberg
VANCOUVER (miningweekly.com) – The world’s largest gold producer Barrick Gold has announced the results of the early tender offer to buy a certain amount of its 4.4% notes with maturity in 2021, 4.1% notes with maturity in 2023 and 3.85% notes with maturity in 2022.
The Toronto-based company also announced an increase in the maximum tender amount for the tender offer from $350-million to $650-million.
Barrick advised that $693.1-million of an outstanding amount of $1.2-billion of 4.4% notes with maturity in 2021, $470.7-million of an outstanding amount of $731.4-million of 4.1% notes with maturity in 2013, and $63.6-million of an outstanding amount of $337.2-million of 3.85% notes due in 2022 were tendered before November 16.
The tender offer will end December 1 and the settlement date is expected to be December 2.
Shareholders who accepted the reimbursement of their notes before November 16 would receive an early tender premium of $30 per $1 000 of the principal amount of notes accepted for purchase, bringing total consideration to $1 030.
DEBT RETIREMENT
Lifting the maximum tender amount to $650-million is in line with the company's stated strategic objective to reduce debt by $2-billion by the end of 2016. The miner has already cut this amount by about $1.4-billion as at the end of the third quarter.
With $2.6-billion in cash and equivalents, plus $4-billion in undrawn credit, Barrick has enough liquidity to cut its long-term debt further in 2017. As at September 30, its total debt was $8.5-billion and the company’s debt-to-equity ratio was 0.87:1. This compares with total debt as at December 31, 2015 of $10-billion and a debt-to-equity ratio of 1.05:1.
As at the end of the third quarter, the total long-term debt amounted to $8.4-billion. Of this, less than $200-million must be repaid before 2019 and $5-billion of the outstanding $8.5-billion in debt is not due until 2033.
The gold major stands to generate more free cash flow and book the proceeds from the sale of its 50% interest in Kalgoorlie, Australia, to Newmont Mining, which is expected to close by the end of the current quarter. Barrick has already reached an agreement with Newmont on the current reserve value, but negotiations remain open with regard to the future value of the Australian asset.
Further, Barrick is also considering the sale of other noncore assets, such as the 64% stake in Acacia Mining, the 50% stake in the Zaldivar copper mine, in Chile, and the Lumwana copper mine, in Zambia.