Gold Producers Balance Sheets Would Weaken Below $1250/oz (ABX) (NEM) (AEM)

December 11, 2013 1:19 PM EST
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With gold trading under $1300, many investors have questions about the balance sheets of gold producers. With this in mind, TD Securities analysts took a close look with particular emphasis on sensitivity to change in gold prices.

"Specifically, we have run scenarios at gold prices between $1,100/oz and $1,350/oz," said analysts Greg Barnes, Steven Green, and Daniel Earle. "In this analysis, we have not made any assumptions for further cost cutting, impairment charges, or asset closures/sales (which we expect would materialize if gold moved sharply lower from here). Our general conclusion is that as a result of the cost reductions to date, producer balance sheets are relatively stable around $1,250/oz but would weaken further on lower gold prices. On the flip side, we expected balance sheets to de-lever at higher gold prices."

At $1,100/oz, companies with the highest forecast 2014 net debt/total capitalization include Barrick (NYSE: ABX), Newmont (NYSE: NEM), Agnico (NYSE: AEM), and Detour Gold.

TD's top picks include Eldorado (NYSE: EGO), Goldcorp (NYSE: GG), B2Gold (NYSE: BTG), Primero and Silver Wheaton (NYSE: SLW).

For an analyst ratings summary and ratings history on Goldcorp click here. For more ratings news on Goldcorp click here.

Shares of Goldcorp closed at $21.74 yesterday.

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