Barrick makes major gold discovery, puts Zaldivar up for sale

Otmane El Rhazi from The Bullion Desk.

Barrick Gold has discovered a ‘significant’ gold deposit in Chile, it said, while confirming it has started the process of selling its main copper asset and affirming its focus on gold.

The discovery, known as Alturas, in Chile’s El Indio belt region is said to be geologically similar to Barrick’s Veladero mine in Argentina, which produced 149,000 ounces of gold in the first quarter of this year and 722,000 ounces in 2014.

Barrick hopes to report an initial resource for the deposit by the end of the year, it said, but warned there has been insufficient exploration to date to define a mineral resource and it is uncertain that further exploration will result in the target being delineated as a mineral resource.

The company made the announcement alongside its first quarter earnings of net $57 million, which came in below estimates and below last year’s $88 million. It attributed the losses to weaker gold prices and sales figures.

Barrick produced 1.39 million ounces of gold at all in sustaining costs of $927 per ounce; its full-year production guidance remains at 6.2-6.6 million ounces at all-in sustaining costs of $860-$895 per ounce.

The company attributes this to lower costs and higher production in the second half of the year.

Barrick is also working on a project to develop an additional shaft at the Turquoise Ridge mine, which could bring forward more than one million ounces of production, roughly doubling output to an average of 500,000 ounces per year.

Barrick has started the process to sell its stake in the Zaldívar copper mine in Chile as part of plans to cut its debt by $3 billion this year.

“Zaldívar is a consistently strong performer in the world’s best jurisdiction for copper mining. Potential buyers have expressed a strong interest in acquiring an interest in the mine,” it said.

Its total debts of $13 billion follow the $7 billion acquisition of Equinox Minerals at the top of an overheated market in April 2011. It has since written down the entire cost of that acquisition.

But while the company stressed that its focus is on gold and that it has no plans to expand its existing copper position, it has formed a strategic partnership with Quantum Pacific Exploration (QPX) to “maximize the value of those assets we already own, including large land positions in Chile in some of the world’s most prolific districts for copper”.

If QPX identifies any copper projects on land belonging to it or to Barrick – excluding zones around Zaldívar, Pascua-Lama, Cerro Casale and El Indio – each will hold 50 percent therein. Barrick will hold 100 percent of all and any gold projects located on its land, however, it said.

(Editing by Mark Shaw)

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