Au Supply Constrained https://www.mining-journal.com/finance/barrick-gold-may-buy-smaller-mines Barrick Gold may buy smaller minesFinanceGary Halverson president of Barrick GoldPublishing Date 11 Nov 2011 3:04pm GMTAuthor Mining JournalBarrick Gold Corp may buy smaller assets near existing mines as part of its strategy to boost output.Barrick will look at such opportunities while also focusing on larger, “substantive” projects, chief executive Aaron Regent said in a Nov 9 interview at the company’s Toronto headquarters.“It’s almost like a brownfield expansion, if there is a small mine that we discover or potentially acquire, because you bolt it on to existing infrastructure,” he said.Regent, 45, says Barrick wants a “balanced approach” to increasing production that includes acquisitions, project development and finding deposits through exploration. World gold supply will remain constrained even amid rising prices because few big new deposits have been discovered, he said.“The industry is going to continue to struggle to maintain supply,” he said. “It might go up a little bit, but then it’s going to come back down.”Barrick is forecasting its own gold production will be 7.6-7.8 Moz this year. Output was 7.8Moz in 2010. The company is targeting annual output of 9Moz within five years.Gold prices have climbed for 10 consecutive years and reached a record USS$1,923.70/oz on Sep 6 in New York. Futures for December delivery fell 1.7% to US$1,761.40 at 4:41 p.m. on the Comex in New York yesterday. There is “a lot of room” for the price to increase further, Regent said. He declined to make a forecast.Barrick increased its copper output with its July purchase of Australia’s Equinox Minerals Ltd in July for C$7.5 billion(US$7.4 billion), which gave it a mine in Zambia and a development project in Saudi Arabia. That deal hasn’t altered Barrick’s strategy, Regent said.“We’re really focused on trying to acquire or discover world-class, long-life deposits,” he said. “When these assets become available, you’ve got to take a real hard look at them.”Barrick’s Pueblo Viejo mine in the Dominican Republic and Pascua-Lama mine on the Chile-Argentina border are scheduled to start production in 2012 and 2013 respectively. The company is also studying nine other development projects.Lower-grade gold deposits, which only become economic at higher gold prices, need to operate at high volumes to be profitable, Regent said. That means they may become more expensive to build.“The capital costs of these lower-grade deposits are going to be in the billions of dollars,” he said. “There’s not a lot of companies in the gold space” that can take on projects costing US$3 billion to US$5 billion, he said.Regent said gold equities will outperform the metal in the future, after trailing this year. He said he doesn’t expect to see a return to hedging, or forward-selling, by producers.“I think the market has made it very clear that they are buying a gold equity because they want the exposure to the gold price,” he said.