Morningstar DBRS Confirms Barrick Gold Corporation’s Issuer Rating at BBB with a Stable Trend

DBRS Limited (Morningstar DBRS) confirmed the Issuer Rating of Barrick Gold Corporation (Barrick or the Company) at BBB with a Stable trend.

KEY CREDIT RATING CONSIDERATIONS
The confirmation takes into account Barrick’s stable, large-scale portfolio of operating assets that is expected to produce between 3.9 million and 4.3 million ounces in 2024, which is in line with production of 4.1 million ounces in 2023. Barrick is the second-largest gold producer in the world. At its flagship 61.5%-owned Nevada Gold Mines (NGM) joint venture with Newmont Corporation, production levels are expected to decrease by approximately 6% but still represents an expected 43% of Barrick's total production in 2024. The large resource at and around the NGM properties also has the potential in the medium term to improve the Company’s business risk profile for Reserve Quality and Related Attributes.

CREDIT RATING DRIVERS
During 2023, Barrick repaid $43 million of long-term debt and paid out $0.7 billion of dividends. In the event that the cash surplus after debt repayments and dividends are used to acquire assets that are significantly accretive and improve Barrick’s business-risk profile, a positive credit rating action is possible. Conversely, a negative credit rating action is possible if gold prices decline by 40% for a sufficient period of time to cause a material deterioration in Barrick’s key credit metrics to the point at which the Company’s credit metrics do not support the rating.

EARNINGS OUTLOOK
We forecast Barrick’s EBITDA to be $4.1 billion in 2024, based on management guidance for gold production and the Bloomberg consensus gold price estimate of $2,030 per ounce (as of February 14, 2024). The decrease relative to 2023 is mostly a result of higher projected gold cash costs while gold sales volumes and gold price realizations remain at the same levels year over year. For 2024, all-in sustaining costs (AISC) are expected to be in the range of $1,320 per ounce to $1,420 per ounce, which is higher compared with the reported 2023 AISC of $1,335 per ounce.

FINANCIAL OUTLOOK
We expect that Barrick’s financial risk profile will remain in the “A” range based on the forecast for gold prices (Bloomberg consensus as of February 14, 2024). However, we note that there are significant risks to the global economy from significantly higher energy, labour, and consumable costs, driven by inflationary pressures. These pressures have been exacerbated by global geopolitical tensions and the continued restrictive monetary policies deployed by central banks seeking to contain inflation.

CREDIT RATING RATIONALE
Barrick’s business risk profile is assessed at the upper end of the BBB (low) band based on the Company’s robust reserves and position as an industry leader where it is an established senior producer with operations globally.

Barrick also has a robust pipeline of brownfield growth projects. Two of the most prominent are (1) the Third Shaft development project at the Turquoise Ridge operations in Nevada, which was commissioned in late 2022 and will facilitate a five-year ramp-up at the operation, and (2) the Plant Expansion and Mine Life Extension project at the Pueblo Viejo (PV) operations in the Dominican Republic. At PV, the plant expansion began in Q2 2023, and will continue over the course of 2024, and Barrick expects to complete the Feasibility Study for additional tailings storage capacity in H2 2024. The construction of a new tailings storage facility will provide the opportunity to extend the mine life out to the 2040s, which could materially improve the Company’s business-risk profile.

The Company had a favourable liquidity profile as of December 31, 2023, with $4.1 billion of cash, $3.0 billion in undrawn credit availability, and no material near-term maturities.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://dbrs.morningstar.com/research/427030 (January 23, 2024).

BUSINESS RISK ASSESSMENT (BRA) AND FINANCIAL RISK ASSESSMENT (FRA)
(A) Weighting of BRA Factors
In the analysis of Barrick, the relative weighting of the BRA factors was approximately equal.

(B) Weighting of FRA Factors
In the analysis of Barrick, the relative weighting of the FRA factors was approximately equal.

(C) Weighting of the BRA and the FRA
In the analysis of Barrick, the BRA carries greater weight than the FRA.

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

Morningstar DBRS applied the following principal methodology:
Global Methodology for Rating Companies in the Mining and Forest Products Industries (January 30, 2024), https://dbrs.morningstar.com/research/427243.

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

A description of how Morningstar DBRS analyzes corporate finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/397223.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info-DBRS@morningstar.com.

The credit rating was not initiated at the request of the rated entity.

The rated entity or its related entities did not participate in the credit rating process for this credit rating action.

Morningstar DBRS did not have access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is an unsolicited credit rating.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS trends and credit ratings are under regular surveillance.

Information regarding Morningstar DBRS credit ratings, including definitions, policies, and methodologies, is available on dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.

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