Mining write-downs to continue amid spending shift: Fitch

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first_img Moody’s expects metals to stay pricey in global recovery Ontario pledges $5 million for new mining exploration Fitch notes that, in addition to Goldcorp (TSX:G), Kinross Gold Corp. (TSX:K) recently took an almost-US$1 billion write down, Barrick Gold Corp. (TSX:ABX) took a US$2.8 billion impairment, and Yamana Gold Inc. (TSX:YRI) recorded over US$800 million in impairment charges in 2014. While these impairments could signal less favourable long-term outlooks, Fitch says, “they will not independently have a negative impact on the credit quality of gold miners.” It notes that these sorts of impairments are typically non-cash items, mining companies tend to have significant capital cushions to absorb write downs, and these impairments are due to changes in strategy that Fitch views as a positive for credit quality. That said, it warns that continued, or surprising, impairments could have a negative impact on credit quality. Share this article and your comments with peers on social media Related news As recovery gains traction, Fitch forecasts higher metals pricescenter_img James Langton In the wake of Goldcorp Inc.’s recent US$2.3 billion impairment charge, Fitch Ratings expects to see continued write-downs in the mining sector. The rating agency says that more write-downs are likely coming as “companies adjust expectations following a wave of acquisitions made during peak market conditions in metals and mining”. As a result, it expects industry write-downs to continue as companies aggressively pull back in capital expenditure spending and focus instead on cost reductions and shifting production to core assets. Keywords Mining industry Facebook LinkedIn Twitterlast_img

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