Barrick carries out bond buyback


Barrick Gold has announced it will carry out a US$750 million bond buyback.

The miner announced it will carry out a cash tender offer for its outstanding notes due between 2018 and 2026, the third time it has announced a buyback in the last six months.

It has been carrying out a series of divestments to lessen its exposure and strengthen its balance sheet in the face of a predicted decline in gold, as it works towards reducing its debt levels by US$3 billion for the year.

To date it has already sold its non-core assets in Nevada to Kinross for $610 million, and flagged interest in approaches for its stake in the Kalgoorlie Super Pit.

In terms of gold, the industry and market remain bearish on its potential for 2016.

Despite gold starting 2016 as the best performing commodity, some analysts are predicting the metal will drop below US$1000 this year.

To date the metal has seen increasingly positive movement, shifting over the US$1200 mark earlier this month, the first time it has reached this level since June last year.

Much of this is due to investors flocking to gold and gold back funds as the market continues to face uncertainty and the oil price stagnates, with the metal representing a safe haven for investors.

However some analysts are more bearish on the metal, expecting it to fall in line with other commodities, experiencing a rougher year ahead.

Bernard Dahdah, from French investment bank Natixis (and according to the winner of last year’s London Bullion Market Association’s gold price forecast competition), is predicting the metal to average around US$970 per ounce this year, with a low of US$900.

Dahdah predicted that “the biggest influence on the price of gold this year will be the expected path of interest rate hikes”.

“Natixis expects further rate hikes by the Fed this year, which should increase the opportunity cost of holding the metal,” he said in the London Metals Bulletin Market Association’s latest precious metals forecast.

“Outflows from physically backed ETFs are expected to continue as higher-yielding investments and a stronger dollar becomes more attractive to investors.

“The upside risk comes from possible delays in rate hike cycle due to a weak US performance or more severe economic issues in China.”

BNP Paribas’ Martin Squires also predicted a weak gold price, with an even more bearish US$960 per ounce average forecast, and a US$900 low for the metal.