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

DBRS Limited (DBRS Morningstar) confirmed the Issuer Rating of Barrick Gold Corporation (Barrick or the Company) at BBB with a Stable trend. The confirmation takes into account Barrick’s stable, large-scale portfolio of operating assets that is expected to produce between 4.2 million and 4.6 million ounces in 2023, an increase of 6% relative to 2022. 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 increase by approximately 7% and return to 2 million ounces per year where it represents an expected 44% of Barrick's total production in 2023. 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.

The Stable trend reflects DBRS Morningstar’s expectation that Barrick’s financial risk profile will remain at the high end of the “A” range based on the forecast for gold prices (Bloomberg consensus as of February 15, 2023). DBRS Morningstar notes that there are significant risks to the global economy from significantly higher energy, labour, and consumable costs, driven by inflationary pressures initially related to global supply chain constraints. These pressures have been exacerbated by the Russian invasion of Ukraine and the continued tightening by central banks seeking to contain inflation. Barrick’s business risk profile is assessed at the upper end of the BBB (low) band based on the Company’s robust reserves, low operating cost structure, and position as an industry leader. The Company had a favourable liquidity profile as of December 31, 2022, with $4.4 billion of cash, $3.0 billion in undrawn credit availability, and no material near-term maturities.

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 Q4 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 is undergoing commissioning over the course of Q1 2023, and Barrick expects to receive government approval for additional tailings storage capacity in H1 2023. 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.

During 2022, Barrick repaid $375 million of long-term debt and paid out $1.1 billion of dividends via its quarterly performance dividend policy that pays out a portion of surplus cash when the net cash position of the Company is above zero. If 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 rating action is possible. Conversely, a negative rating action is possible if gold prices decline significantly 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.

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

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/396929/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings (May 17, 2022).

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

The principal methodology applicable to the rating is the Global Methodology for Rating Companies in the Mining Industry (August 30, 2022; https://www.dbrsmorningstar.com/research/402159).

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

A description of how DBRS Morningstar analyzes corporate finance transactions and how the methodologies are collectively applied can be found at: https://www.dbrsmorningstar.com/research/397223/interplay-of-global-corporate-finance-rating-methodologies-when-analyzing-corporate-finance-transactions.

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@dbrsmorningstar.com.

This rating was not initiated at the request of the rated entity.

The rated entity or its related entities did not participate in the rating process for this rating action. DBRS Morningstar did not have access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this 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. DBRS Morningstar trends and ratings are under regular surveillance.

DBRS Morningstar will publish a full report shortly that will provide additional analytical detail on this rating action. If you are interested in receiving this report, contact us at info@dbrsmorningstar.com.

Information regarding DBRS Morningstar ratings, including definitions, policies, and methodologies, is available on www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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