UPDATE 1-Gold miners keep chipping at costs, debt even as profits climb

Thu Jul 28, 2016 6:46pm EDT
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(Adds interviews with Goldcorp, Agnico Eagle CEOs)

By Susan Taylor and Nicole Mordant

TORONTO/VANCOUVER July 28 (Reuters) - Gold bullion prices have increased 26 percent this year, but the world's biggest gold miners are paring costs and selling assets to lower debt despite the windfall rather than boosting spending.

Some investors had expected mining companies to lift spending on exploration, expansion or dividends during a largely upbeat financial reporting season, rather than keep shaving costs.

"They're still, by and large, in cost-cutting mode and hunkering down, even though conditions have improved over the last five or six months," said Jeremy Sussman, global mining analyst at Clarksons Platou Securities in New York.

Sussman attributed the caution to a need to see a sustained rally in gold prices at above $1,300 an ounce. Spot gold was at $1,336.19 on Thursday, but just six months earlier prices were below $1,100 an ounce.

Net debt among the big North American gold producers is down 30 percent from a peak in late 2014, according to a July 20 RBC Capital Markets note, and is expected to fall 4 percent to $19.8 billion in the second quarter.

"We're going to continue to drive hard on debt," Barrick Gold President Kelvin Dushnisky said on a conference call, when asked if the company would boost its dividend in the next six to 12 months.

"In the immediate term, our investors have encouraged us to stay focused on debt reduction, which we'll do."   Continued...