Basking in the afterglow of record third quarter profits, Barrick Gold Corp. (TSX: T.ABX, Stock Forum) / (NYSE: ABX, Stock Forum) took time this week to put the spotlight on some potential new mines in its development pipeline.
In a conference call with analysts, Barrick’s senior vice-president, global exploration, Rob Krcmarov said the world’s leading gold company is on track to spend between $370 million and $390 million on global exploration this year (including $26 million in Nevada) and is currently focusing on four key exploration projects.
- They include the Red Hill and Goldrush discoveries, which are located on the company’s wholly-owned Cortez property, which covers 2,800 square kilometers along the fabled Carlin gold trend in Nevada.
- The Turquoise Ridge mine, located 70 kilometres northeast of Winnemucca, Nev.
- The Lumwana copper mine in Zambia.
Red Hill and Goldrush are separate gold zones that are located along a 7-kilometre mineralized trend. Barrick has said the new discoveries are geologically similar in style to its Cortez Hills and Goldstrike (Nevada) mines. They have the potential to merge in what is potentially the next giant gold deposit in the Cortez camp.
“Drilling results continue to increase our confidence in the size potential and also the continuity of mineralization,’’ said Krcmarov. The company anticipates a significant expansion of the current 3.5 million-ounce inferred resource and may be in a position to make an announcement by year end.
So far, drilling has not only extended the strike length of the Red Hill zone, it has also intersected grades which are high enough to support underground mining in the area, said Krcmarov.
One step out hole located about 1,000 feet north of the current resource model at Red Hill intersected 120 feet of 0.17 ounces of gold per tonne. Another located 2,000 feet north of the zone, intersected 80 feet of 0.16 ounce per tonne
Exploration crews are also drilling in the Goldrush area (about 6,000 feet south of Red Hill) to see how much the zone extends to the south.
At Turquoise Ridge, Barrick is working to develop a large scale open pit to allow the company to mine lower grade material around an existing underground operation. Barrick is the operator and owns 75% of Turquoise Ridge. The other 25% is held by Newmont Mining Corp. (NYSE: NEM, Stock Forum). It is hoped that the current drilling will allow the company to increase the annual production rate from 124,000 ounces (Barrick’s share) in 2010.
With a prefeasibility study to be completed next year and nine drills on site, the company is hoping to upgrade 7.5 million ounces of inferred resources into the measured and indicated category.
Meanwhile, Barrick is launched an aggressive drill campaign at the Lumwana copper mine in Zambia, which is scooped up along with its Equinox Minerals Ltd. acquisition in July.
The aim is to define the limits oftwo deposits -- Chimiwungo and the producing Malundwe area --which remain open in multiple directions and advance an expansion study that could potentially double the processing rates.
“This is a very large mine with multiple zones,’’ said Barrick spokesman Andy Lloyd.
Lumwana is producing at an annual rate of 300 million pounds of copper at a cash cost of between $1.75 and $1.96 per pound.
Barrick has said it expects to spend $50 million in 2011 as part of a plan to increase the measured and indicated resources at Lumwana. In keeping with that plan, the company has 11 active rigs on the property and hopes to add another nine by the end of this year.
During the conference call, Barrick officials said the company is on track to bring its Pueblo Viejo gold mine in the Dominican Republic on stream next year. Pueblo Viejo is held 60% by Barrick and 40% by Goldcorp. (TSX: T.G, Stock Forum) (NYSE: GG, Stock Forum). The Pascau-Lama mine, which is located on the Chilean and Argentina border, is expected to commence production in 2013.
The company is also working on the feasibility of developing the Donlin gold mine in Alaska in a joint venture with NovaGold Resources Ltd. (TSX: T.NG, Stock Forum). By the end of this year, it hopes to complete a study that envisages the inclusion of a gas pipeline that would eliminate the need to barge diesel fuel to the site.