So much for the relief rally.
Canaccord Genuity Precious Metals Analyst Steven Butler published a report on Monday, "Balance Sheet Analysis: Who Holds Up At Current Low Spot Prices."
With gold's historic selloff, Butler highlights at the prevailing low spot prices ($1,375 Au, $23.50 Ag and $2.25 Cu), most producers will be faced with cash shortfalls in the 2013-
2016 period, which may necessitate debt refinancings, drawdown of unused credit facilities, project deferrals and/or potential dividend cuts. All-in sustaining costs for the sector
are approaching $1,100-$1,200/oz and the “breakeven” gold price for new production would be closer to $1,400-$1,500/oz. In particular, under the spot price scenario.
Butler highlights Barrick Gold with a $4.3 billion shortfall in Q2/15 which would necessitate debt refinancing, tapping $3 billion of unused credit capacity and/or
reducing the current annual dividend ($800 million);
Kinross Gold with a $1 billion shortfall by Q2/16 which could require using credit facility to repay $1 billion term loan due August 2015 and deferring capex at Tasiast;
Agnico-Eagle with a $780 million shortfall by Q4/16 which would necessitate drawing on available credit ($1.17 billion) and/or deferring the Meliadine project or Kittila expansion or
reducing the current annual dividend ($150 million); and
IAMGOLD with a $430 million shortfall by Q4/16 which would necessitate deferring the Niobec block-cave expansion and and/or reducing the current annual
dividend (~$95 million).
On the positive side, companies that are more defensive due to lower NAV sensitivity and/or better
balance sheet positioning include:
Goldcorp (G),
Eldorado Gold (ELD),
Yamana Gold (YRI),
AuRico Gold (AUQ),
B2Gold (BTO),
Nevsun (NSU),
New Gold (NGD),
Primero Mining (P)
Pan American Silver (PAA). |
