DBRS Assigns A (low) Rating with Stable Trend to $3 Billion Barrick Debt Issue

DBRS has today assigned a rating of A (low), with a Stable trend, to (1) $650 million of senior unsecured notes maturing 2018 and (2) $1.5 billion of senior unsecured notes maturing 2023, to be issued by Barrick Gold Corporation (Barrick or the Company) and (3) $850 million of senior unsecured notes maturing 2043, to be issued by Barrick North America Finance LLC (collectively, new Barrick Notes). The net proceeds from the new Barrick Notes will be used primarily to repay existing indebtedness under a revolving credit facility maturing in January 2018, with the balance being used for general corporate purposes, including, but not limited to, the repayment, in whole or in part, of $500 million of notes issued by Barrick’s wholly owned subsidiary, Barrick Gold Financeco LLC, that mature in September 2013.

The new Barrick Notes will be unsecured, unsubordinated obligations of Barrick and Barrick North America Finance LLC, respectively, and will rank equally with the other unsecured, unsubordinated obligations of Barrick and Barrick North America Finance LLC. In addition, the notes to be issued by Barrick North America Finance LLC will be unconditionally and irrevocably guaranteed by Barrick. Barrick’s guarantee (as defined) will be an unsecured, unsubordinated obligation of Barrick and will rank equally with Barrick’s other unsecured, unsubordinated obligations.

The new Barrick Notes maturing 2023 and the new Barrick Notes maturing 2043 will each be a separate series of debt securities under an indenture dated as of June 1, 2011, between, among others, Barrick, Wilmington Trust Company as trustee and Citibank, N.A. as indenture agent. The indenture, the new Barrick Notes and related guarantees will be governed by and construed in accordance with the laws of the State of New York.

Pursuant to an exchange and registration rights agreement, Barrick has agreed to file a registration statement with the United States Securities and Exchange Commission with respect to an offer to exchange each series of new Barrick Notes for a new issue of debt securities with terms substantially similar to and evidencing the same indebtedness as such new Barrick Notes and which will be registered under the United States Securities Act of 1933, as amended.

Barrick is the world’s largest gold producer, as well as a producer of copper and other metals. The Company’s net debt rose by about $1.2 billion in 2012 and by about a further $600 million in the first quarter of 2013, as (1) lower realized gold and copper prices, (2) lower gold and copper sales volumes, (3) higher costs, high capital expenditures and difficulties with development projects have resulted in higher debt levels and deteriorating credit metrics for the Company. Nonetheless, the Company’s credit metrics remain supportive of its current ratings. Gold and copper prices have deteriorated further since the end of the first quarter of 2013 and the Company’s capital expenditures remain high. A failure to reverse the trend of deteriorating credit metrics this year could lead to a negative rating action.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating Companies in the Mining Industry (June 2011), which can be found on our website under Methodologies.