Barrick $5.5bn writedown to cut net worth 40 per cent, causing potential credit concerns

Pascua-Lama project in Chile

Barrick Gold’s (NYSE: ABX) expected asset writedowns of $5.5 billion on the Pascua Lama project in Chile would slash the company’s net worth by roughly 40%, shrinking its credit facility ‘cushion’ to $4.1 billion, Bloomberg reported Tuesday.

The company needs to hold a “consolidated tangible net worth” of at least $3 billion in order to sustain its $4 billion revolving credit facility.

Debt analysts at New York City’s CreditSights say that the company needn’t worry just yet, but “if gold prices come down from here, that’s going to be an issue.”

Pascua-Lama’s production schedule has been re-evaluated and will not be producing until mid-2016. Construction on the mine stopped in April due to the Chilean government’s environmental concerns.

The write-down comes at the end of a difficult month for the ore miner which hit a 21-year low two weeks ago on the Toronto exchange. Shareholders have suffered a decline in market value of more than $40 billion decline since April 2011.

2443 0

More Latin America News