Barrick could face a ratings downgrade of “another notch or so” if gold prices decline further and stay lower for a prolonged period, although it will probably remain investment grade, said Li.
“They will get hit pretty hard in terms of earnings and margins and free cash flow” at lower prices, he said.
Barrick has forecast it will cost $950 to $1,050 to produce an ounce of gold on average from all its mines this year. Goldcorp forecast a cost of $1,000 to $1,100.
Barrick’s net debt would probably increase to a peak of $15.8 billion in 2014 if it decides to cancel its Pascua-Lama project, assuming a gold price of $1,300,
Anita Soni, a Toronto-based analyst at Credit Suisse Group AG, said in a note dated June 25. Net debt could rise to $17 billion in 2015 if the project on the Chile-Argentina border goes ahead.