Barrick gold inveils its $2 billion growth plan

Engineering and Mining Journal, Oct 2002

Barrick Gold has unveiled a new $2 billion growth plan that could boost production to nearly 7 million ounces of gold by 2006. The five-year plan calls for increasing production at lower costs, focusing on development of some of Barrick's South American assets. The new Alta Chicama project in Peru figures highly in the plan.

The company expects to start production from this open-pit project by 2005, at a rate of 500,000 ounces/year at a cash cost of $130/ounce. The company started a program of infill and step-out drilling at Lagunas Norte to expand the resource. Other drills are targeting gold showings identified within a 15-kilometer radius of the original discovery. A feasibility study is scheduled for 2003 and construction is expected to begin late 2003 or early 2004.

The Cowal project in Australia, which Barrick picked up as part of the merger with Homestake Mining, should see production of 270,000 ounces/year at $170/ounce by 2005.

A feasibility study completed by Homestake is being updated, and will include additional metallurgical test work and reserve drilling to optimize the scope and economics of the project The study should be completed in the first half of next year.

The Pascua-Lama and the Veladero deposits, which straddle the border of Chile and Argentina, will be developed as a unified district, starting with the Veladero property.

Barrick expects to file permit applications before the end of the year.

Road and camp construction is also scheduled for the fourth quarter, and site construction is expected to begin in September 2003. The company is in the midst of optimizing the PasquaLama feasibility study, evaluating synergies with Veladero and the impact of peso devaluation on the project's economics, advancing optimization work and the permitting process, and continuing to monitor the political and economic situation in Argentina.

This study should be complete by the first half of 2004, and construction should begin in late 2005. Barrick hopes to begin production in 2006 at Veladero, followed by Pascua-Lama in 2008.

In addition to these mine development programs, Barrick anticipates a reduction in its forward sales from 179 million ounces to a target of 12 million ounces, based on market conditions, by year-end 2003. The company also plans to continue to reduce its call option and variableprice sales contract position, with a target of 1.5 million ounces by the end of 2003. As a result of all these activities, the company expects production to climb 21% to reach 6.9 million ounces by 2006, doubling earnings along the way.