New York, July 06, 2022 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings -and other ratings that are associated with the same analytical units for the rated entity(entities) listed below.
The review was conducted through a portfolio review discussion held on 29 June 2022 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. A possible outcome from periodic reviews is a referral of a rating to a rating committee.
This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement.
Key Rating Considerations
The principal methodology used for this review was Mining published in October 2021. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Scale: Scale is a consideration because it provides indications of a company's revenue-generating capability, its overall market strength and importance to the markets it serves, and its resilience to changes in commodity prices and demand. Companies with larger scale generally have greater flexibility to manage their businesses under different price and demand scenarios, which is important in an industry that is cyclical. A large revenue base can also lead to economies of scale that lower overall costs for raw materials and to efficiencies for corporate administration of the business, in areas such as finance, legal, tax and accounting. Larger companies also tend to generate higher cash flow for capital reinvestment and debt reduction and have greater access to the capital markets, which can reduce the cost of capital. Total revenue is an indicator of scale.
Business Profile: A mining company's business profile is an indicator of its ability to generate earnings and cash flow and the relative stability and sustainability of that cash flow, which are important considerations in an industry characterized by cyclicality and high price volatility. Susceptibility to environmental, regulatory, and political risk is another important aspect of a company's business profile. The location and number of a company's mines is also a consideration because having multiple, discrete assets in different regions typically lessens the impact of strikes, equipment failures, operational event risks, or other events that could curtail production. Geographic diversity also helps mining companies mitigate the impact of trade barriers and tariffs on exports.
Profitability: Profits are considered because they are needed to generate sustainable cash flow through different economic environments, reinvest in strategic growth projects and service debt and other obligations, which are especially important for an industry as capital-intensive as mining. How well a company can control its costs is a consideration because of the industry's price volatility, limited pricing power and vulnerability to fluctuations in input costs. A strong cost position is an important indicator of a company's ability to maintain profitability during a downturn. EBIT margin is one indicator of profitability.
Leverage and Coverage: Leverage and cash flow coverage measures provide indications of how much financial risk a mining company is willing to undertake. These metrics are also indications of the company's ability to sustain its competitive position, invest in growth opportunities and service debt. Ratios including EBIT/ Interest, Debt/ Book Capitalization, Cash from Operations minus Dividends/ Debt are indicators of leverage and coverage.
Financial Policy: Financial policy encompasses management and board tolerance for financial risk and commitment to a strong credit profile. It is a consideration, because it directly affects debt levels, credit quality, the future direction for the company and the risk of adverse changes in financing and capital structure. Financial risk tolerance serves as a guidepost to investment and capital allocation. Liquidity management is also considered and can provide insight into risk tolerance.
Other Considerations: Other considerations may include: financial controls and the quality of financial reporting; corporate legal structure; the quality and experience of management; assessments of corporate governance as well as environmental and social considerations; exposure to uncertain licensing regimes; and possible government interference in some countries. Regulatory, litigation, liquidity, technology, and reputational risk as well as changes to consumer and business spending patterns, competitor strategies and macroeconomic trends are also considered.
This announcement applies only to Rated Entities with EU rated, UK rated, EU endorsed and UK endorsed ratings. Rated Entities, with Non EU rated, non UK rated, non EU endorsed and non UK endorsed ratings may be referenced herein to the extent necessary, if they are part of the same analytical unit.
Please see the Issuer page on https://ratings.moodys.com for each of the ratings covered, most updated credit rating action, rating history, and Credit Rating action Press Release including the rating rationale and factors that could lead to a rating upgrade or downgrade.
List of Issuers/Rated Entities
Agnico Eagle Mines Limited
Alcoa Nederland Holding B.V.
Alliance Resource Operating Partners, L.P.
Alpha Metallurgical Resources, Inc.
Arch Resources, Inc.
Baffinland Iron Mines Corporation
Barrick Gold Corporation
Coeur Mining, Inc.
CONSOL Energy Inc.
Conuma Resources Limited
Eldorado Gold Corporation
Ero Copper Corp.
Foresight Energy LLC
Hecla Mining Company
Hudbay Minerals Inc.
Kinross Gold Corporation
Mountain Province Diamonds Inc.
Natural Resource Partners L.P.
New Gold Inc.
Peabody Energy Corporation
Rio Tinto Group
Tacora Resources Inc.
Taseko Mines Limited
Teck Resources Limited
Warrior Met Coal, Inc.
Yamana Gold, Inc.
This publication does not announce a credit rating action.
For any credit ratings referenced in this publication, please see the issuer/deal page on https://ratings.moodys.com
for the most updated credit rating action information and rating history.
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