Barrick Gold has reported the results of prefeasibility and feasibility studies on projects in its organic growth pipeline, saying on Monday it could spend more than $2-billion should it decide to proceed with the projects in Nevada and Peru.
The TSX- and NYSE-listed company said it would cost about $1-billion to develop an underground mine at Goldrush, in Nevada.
Construction would start in 2020, should Barrick decide to proceed with the project. A prefeasibility study had determined that the mine would add about 440 000 oz/y of gold to the company’s production profile from 2021 onwards, at all-in sustaining costs (AISC) of $665/oz.
Further, the gold miner advised that the expansion of underground mining at its 75%-owned Turquoise Ridge mine, in Nevada, could cost about $300-million to $325-million, on a 100%-basis. This would entail the addition of another production shaft to raise output from about 280 000 oz/y to about 500 000 oz/y. Newmont Mining held the remaining 25% of the mine.
In addition, Barrick was considering the installation of a refractory ore processing circuit at Lagunas Norte, in Peru, at a capital cost of $640-million. Should the project go ahead, it would extend the mine life by nine years, with construction to start in 2020, and output to reach 240 000 oz/y from 2021 onwards.
The gold miner also had the option to expand underground mining at the Cortez mine, in the US, into the Deep South zone, below currently permitted levels at a cost of $153-million. This could add about 300 000 oz/y to the company’s production profile, at an AISC of $580/oz. Construction was slated to start around 2019/2020, with first production expected from 2022.
Meanwhile, Barrick on Monday launched a cash tender offer for up to $750-million of notes to help cut debt by at least $2-billion in 2016. The company’s balance sheet was saddled with almost $10-billion in debt after it paid back about $3-billion in 2015. The miner said it expected to produce between 5-million and 5.5-million ounces of gold at an AISC of between $775/oz and $825/oz this year, in stark contrast with 2015 production of 6.12-million ounces at an AISC of $831/oz.
Production would decline to at least 4.5-million ounces a year by 2020, while simultaneously driving down AISC to below $700/oz by 2019. Barrick stated that the company’s overarching objective was to generate, and ideally grow, free cash flow in any foreseeable gold price environment.