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Barrick outlines investments to drive long-term value

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Global Mining Review,

Canadian gold mining company Barrick Gold Corp. has outlined plans to maximise long-term value from its portfolio of gold operations and projects. These assets are clustered in core districts throughout the Americas, and support a sustainable long-term production profile with significant optionality and upside. Barrick’s core objective remains to grow free cash flow per share over the long term.

The company has provided updates on four feasibility-level projects that have the potential to contribute more than one million oz of annual production to Barrick, with initial contributions beginning in 2021. Nevada projects at Cortez Deep South, Goldrush, and Turquoise Ridge (75% interest) have been approved, and are in execution. Optimisation work on a sequenced project to extend the life of the Lagunas Norte mine in Peru is underway.

Barrick is designating Turquoise Ridge as a core mine in recognition of the exceptional growth potential of the operation, facilitated by the construction of a third shaft, productivity improvements, and an increase in processing capacity.

Barrick has also reported preliminary results of a scoping-level study to expand throughput at the Pueblo Viejo mine (60%), and provided updates on greenfield projects including Alturas, Donlin Gold (50%), Norte Abierto (50%), and Pascua-Lama. In addition, Barrick has provided an update on leadership changes within the company’s operations group.

Maximising value from a sustainable, long-term production profile

Based on its current asset mix, between 2019 and 2022, Barrick expects average annual gold production to be between 4.2 - 4.6 million oz, at an average cost of sales of US$850 - US$980 per oz, and average all-in sustaining costs of US$750-US$875 per oz. Between 2023 and 2027, the company’s current plans indicate the potential for average annual gold production above four million oz. This includes contributions from projects at Cortez Deep South, Goldrush, Lagunas Norte, Robertson, Pueblo Viejo and Turquoise Ridge. It does not include any contributions from Alturas, Donlin Gold, Norte Abierto (50%), or Pascua-Lama.

In the near term, Barrick aims to strengthen its production profile through investment in brownfield projects and mine exploration drilling, supporting reserve replacement and the identification of new resources which, in many cases, can be quickly incorporated into mine plans, driving improvements in production and cash flow.

Operational leadership transition

Over the past two and a half years, Richard Williams has led the transformation of Barrick’s operating system, delivering significant improvements in safety, environmental management, and operating efficiency.

Concurrent with this, Williams has also been leading ongoing discussions with the Government of Tanzania that aim to resolve outstanding issues facing Acacia Mining plc. In order to ensure those discussions are concluded expeditiously, Williams is taking on a new role as the Chairman’s Executive Envoy to Tanzania, and will focus exclusively on this challenge.

Responsibility for Barrick’s Operations group has been assigned to Greg Walker, Senior Vice President, Operational and Technical Excellence. Walker was most recently Executive General Manager of the Pueblo Viejo mine in the Dominican Republic.

Projects in execution

Turquoise Ridge Expansion, Nevada, US (75% Barrick / 25% Newmont)

Project Overview: Double annual production through construction of a third shaft.

The construction of a third shaft at Turquoise Ridge, with an estimated initial capital investment of US$300 - US$325 million (100% basis) has been approved by the company. Combined with additional processing capacity, this is expected to enable the mine to roughly double annual production to more than 500 000 oz per year (100% basis), at an average cost of sales of around US$720 per oz, and average all-in sustaining costs of roughly US$630 per oz. In addition to increasing annual production, the third shaft is expected to reduce operating costs, boost mining productivity rates, and increase total life of mine production by allowing for reduced cutoff grades.

In January 2018, Barrick and Newmont Mining Corp. reached a new, seven-year toll milling agreement for ore processing at Newmont’s Twin Creeks facility, which will support the mine expansion. The agreement increases contractual annual throughput from 730 000 tonnes in 2017, to 850 000 tonnes in 2018 and 2019, and 1.2 million tpy between 2020 and 2024.

Permits for the construction of a third shaft are in hand. Surface works and shaft sinking are expected to take place in 2018 and 2019, followed by equipping of the shaft in 2020 and 2021, with initial production from the new shaft expected to begin in 2022, and sustained production expected to begin 2023.

Barrick is designating Turquoise Ridge as a core mine in recognition of the exceptional growth potential of the operation. Turquoise Ridge has 5.9 million oz of proven and probable gold reserves (Barrick’s 75% share) at an average grade of 15.56 grams per tonne—the highest reserve grade in the company’s operating portfolio. The mine added 2.1 million oz of proven and probable gold reserves in 2017 through drilling (Barrick’s 75% share), and the deposit remains open in multiple directions, including at depth.

Cortez Deep South, Nevada, US

Project Overview: Expand mining into the Deep South area below currently permitted levels of the Cortez Hills underground mine, bringing forward production.

The Deep South project will use infrastructure which has already been approved under current plans to expand mining in the Lower Zone of the Cortez underground mine, including the new Rangefront twin declines and other underground infrastructure already under construction.

Permitting for Deep South was initiated in 2016 with the submission of an amendment to the current Mine Plan of Operations to the Bureau of Land Management, and is expected to take approximately three to four years, including the preparation of an Environmental Impact Statement. A record of decision is expected in the second half of 2019, followed by two years of construction, with initial production from Deep South in 2022.

Goldrush, Nevada, US

Project Overview: Development of an underground mine at Goldrush.

Goldrush is on track to become Barrick’s newest mining operation in the company’s core district of Nevada. Decline construction, detailed engineering, and permitting (Environmental Impact Statement) are expected to take place between 2018 and 2020, with construction and initial production expected between 2021 and 2022, and sustained production expected from 2023. The first phase of the project involves the construction of an exploration twin decline to provide access to the orebody at depth, which will enable further exploration drilling, as well as the conversion of existing resources to reserves. The exploration declines are permitted and can be converted into production declines in the future.

Goldrush currently has proven and probable gold reserves of 1.5 million oz and measured and indicated gold resources of 9.4 million oz, with significant potential to identify additional resources once underground access to drill the deposit is established. In addition, the company is drilling the nearby Fourmile target, located one to three kilometres north of the Goldrush discovery. This area is geologically similar to the high grade Deep-Post and Deep-Star deposits in the Goldstrike area. Early drilling has intersected mineralisation well above the average grade of the measured and indicated resources at Goldrush. Drilling to date suggests Fourmile and Goldrush may be part of a continuous, seven-kilometre-long mineralised system encompassing both deposits.

Brownfield evaluation

Lagunas Norte Mine Life Extension, La Libertad, Peru

Project Overview: Extension of the mine life through sequenced installation of mill, carbon-in-leach, flotation, and autoclave processing facilities.

The first component of the project contemplates the construction of a grinding and carbon-in-leach processing circuit that would treat remaining carbonaceous oxide material at Lagunas Norte. Environmental permits for these facilities are already in hand, while construction permits are pending. Barrick expects to complete detailed engineering in 2018 and 2019. If approved, construction and commissioning are anticipated to take place in 2019 and 2020, followed by initial production in 2021. The second component of the project contemplates the construction of a flotation and autoclave processing circuit that would treat refractory material. If approved, detailed engineering and environmental permitting for these facilities is expected to take place between 2021 and 2023, with construction and commissioning between 2024 and 2026, followed by first production in 2027.

Pueblo Viejo, Sanchez Ramirez, Dominican Republic (60% Barrick / 40% Goldcorp)

In 2017, Barrick completed an initial scoping-level study for a plant expansion at the Pueblo Viejo mine that would increase throughput by 50% to 12 million tpy, allowing the mine to maintain average annual production of 800 000 oz after 2022 (100% basis).

The project involves the addition of a pre-oxidation heap leach pad with a capacity of eight million tpy, a new mill and flotation concentrator with a capacity of four million tpy, and additional tailings capacity. Higher-grade ore would be processed through the mill before moving through the flotation and autoclave circuits. Lower-grade ore would be treated on the pre-oxidation pad before moving through the mill and autoclave circuits.

This project has the potential to convert roughly seven million oz of measured and indicated resources to proven and probable reserves (100% basis). Prefeasibility level studies have now been initiated, along with the construction of on-site proof of concept facilities for pre-oxidation and flotation.

Robertson Property, Nevada, US

In June 2017, Barrick completed the acquisition of the Robertson property and other claims in Nevada from Coral Gold Resources. The Robertson property is adjacent to Cortez, located just six kilometres north of the Pipeline mill. If successfully brought into production, material from the project would provide an additional feed for the Cortez mill, with the potential to extend open pit operations in the Cortez District. Robertson also has processing synergies with the Deep South underground expansion project at Cortez. In addition, the land package contains a number of promising near-mine exploration opportunities, as well potential new exploration targets in this highly prospective and prolific district.

Long-term optionality in greenfield projects

Donlin Gold, Alaska, US (50% Barrick / 50% NOVAGOLD)

Donlin Gold, located in Alaska, contains 19.5 million oz of measured and indicated gold resources (Barrick’s 50% share). The project represents one of the world’s largest undeveloped gold deposits, at an advanced stage of permitting in a stable jurisdiction. Barrick is working in collaboration with NOVAGOLD to optimise the project, including the potential for staged development, while reducing upfront capital and mitigating development risk. In support of this process, the company completed a drill programme of 7040 metres in 2017 designed to further strengthen our understanding of target mineralised zones. Initial drilling results are encouraging and will form part of an overall geological review.

Permitting for the project remains underway. Barrick expects the final Environmental Impact Statement to be published by the US Army Corps of Engineers in early 2018, with a Record of Decision expected in the second half of the year.

Norte Abierto, Atacama Region, Chile (50% Barrick / 50% Goldcorp)

Norte Abierto, a new joint venture with Goldcorp in Chile, contains 11.6 million oz of proven and probable gold reserves, and 13.3 million oz of measured and indicated gold resources (Barrick’s 50% share). The joint venture is now advancing an optimised project design, including an updated geological model for the Cerro Casale, Caspiche, and Luciano deposits. Work in 2018 will include trade-off and engineering studies on power, water, mining methods, and metallurgy, as well as ongoing stakeholder engagement and environmental baseline monitoring.

Pascua-Lama, San Juan Province, Argentina / Atacama Region, Chile

Pascua-Lama, located on the border between Argentina and Chile, contains 21.3 million oz of measured and indicated gold resources. Barrick is evaluating a block cave underground operation at Pascua-Lama with an initial processing capacity of 13 000-15 000 tpy, with the potential to expand to 30 000 tpy in the future. The project would use the existing process plant and tailings facility on the Argentinean side of the border, construction of which is already well advanced. A switch to underground mining addresses a number of community concerns by significantly reducing the overall environmental footprint of the project, as compared to an open pit operation.

The company initiated a targeted drill programme in November 2017 to improve ore body knowledge on the Argentinean side of the deposit, where further data was required to validate underground development plans and metallurgy. Ten of 12 holes have been completed thus far.

At present, the Pascua-Lama project does not meet Barrick’s investment criteria; the company’s intention is to seek a partner for Pascua-Lama, allowing it to share capital costs and technical expertise, thereby reducing risk. A working group with Shandong Gold to study a potential partnership has been formed. Preparations for permitting an underground operation are underway in Argentina and Chile, including closure of existing surface facilities in Chile.

Alturas, Coquimbo Region, Chile

The Alturas project, located in Chile on the El Indio Belt, is a Barrick greenfield discovery with 6.8 million oz of inferred gold resources as of 31 December 2017. In 2017, a scoping-level study for a conventional open pit heap leach operation at Alturas was completed, which fell just short of the company’s hurdle rate. In support of project optimisation efforts, undertaking additional drilling focused on increasing grades is being undertaken, adding and better-defining shallow near surface mineralisation, and increasing potential mine resource tonnage.

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