Barrick weighs big underground mining bets in northern Nevada

Looks at investing $1.4B in four local mines

Barrick is looking at sinking $1B into a new “Goldrush” underground mine said to contain 8.6 million ounces of gold. It is located in Lander County near Barrick’s Cortez Hills project.

Barrick also announced “pre-feasibility” plans to add a third production shaft at Turquoise Ridge in Humboldt County, develop an underground mine at Cortez after the pit there closes in 2018, and continue to explore a new “Fourmile” discovery that appears geologically similar but even higher-grade than nearby Goldrush and Cortez Hills sites.

In all, Barrick’s long-term capex projects would represent $1.4B of investments into northern Nevada mines. Barrick simultaneously announced plans to invest about $640M to extend the life of its Lagunas Norte mine in Peru. 

All these Barrick projects must pass years of planning and permitting, and will continue to be evaluated throughout that process. Barrick’s analysis uses a long-term set gold price of $1,200 per ounce.

Gold has traded above $1,200 for several weeks. A small rise in the US key interest rate, low oil prices and general economic uncertainty have driven gold prices up about 18% since mid-December, 2015. Gold traded at year-long highs of around $1,250 in mid-February.

Barrick President Kelvin Dushnisky recently told Business News Network that he believes gold prices of US $1,500 per ounce are “achievable.”

GOLDRUSH

The Goldrush mine is located about four miles southeast of Barrick’s Cortez Hills mine in Lander County. Originally Barrick planned to pit-mine the resource, but it now hopes to develop a more economical underground mine at the site.w

Barrick’s pre-feasibility study estimated initial costs at $1B, and all-in sustaining costs of $665 per ounce. It estimates production potential at 440,000 ounces per year for the first five years.

Barrick hopes to begin the project in 2020. Its pre-feasibility study suggests Goldrush could have a mine life of 21 years, with first production as early as 2021 and sustained production starting in 2023.

Barrick estimates the Goldrush site contains 8.6 million ounces of gold, which the company has classified as “measured” and “indicated.”

Ore extracted from Goldrush would be transported for processing at the mill at Barrick’s Goldstrike mine, near Carlin.

Barrick expects to start the permitting process, which can take three to four years, in 2017. In the same year, Barrick plans to start construction on a twin exploration decline. The twin decline would support the conversion of the measured and indicated gold reserve estimates to “proven” and “probable” estimates. Additionally, it would allow Barrick to continue exploration drilling.

If the project moves forward and Goldrush realizes its production of 440,000 ounces per year at their long-term gold price, set at $1,200, that represents $528 million in gross production per year.

FOURMILE

According to its pre-feasibility report, Barrick has identified a new target two miles north of the Goldrush discovery. The Fourmile area is geologically similar to the high-grade, deep-post and deep-star deposits in the Goldstrike area. Barrick claims early drilling has found mineralization well above the average grade of the measured and indicated resources at Goldrush.

TURQUOISE RIDGE

According to Nevada Dept. of Taxation (NVDoT) figures, Turquoise Ridge was Humboldt County’s second-best producer for fiscal 2014-2015, with $336 million in gross production. Nearby Twin Creeks was slightly ahead at $428 million.

Barrick’s pre-feasibility study looked at digging a third shaft at the underground mine. If completed, it could grow output from 280,000 ounces a year to 500,000, Barrick says.

Centrally located over known reserves, the shaft would initially provide ventilation. Later, it would be converted into a “full production shaft,” Barrick said.

In its pre-feasibility report, Barrick estimated initial costs at $300-$325 million, and an all-in sustaining cost (AISC) of $625 to $675 per ounce.

Once completed, the expansion would enable sustained ore throughputs of 1,825 tons per day, the current processing plant’s max. Annual production could reach half a million ounces in gold, the company said.

Barrick claims all permits are in place to complete this work. However, no start date has yet been estimated for the project.

If the project moves forward and Turquoise Ridge realizes their production rate of 500,000 ounces per year at their long-term gold price of $1,200, that represents $600 million in gold production per year, or about 40 percent more than the mine’s total reported gross production of minerals for fiscal 2014-2015.

CORTEZ

Barrick’s pre-feasibility study also looked at a “Deep South” underground expansion at Cortez Hills, south of Battle Mountain.

Cortez was the biggest producer in Lander County last fiscal year, with gross proceeds of $1.1 billion, but Barrick expects to end open pit mining there in 2018. According to the press release, the underground expansion could help offset the loss from Cortez’s highly productive open pit.

Initially, the expansion would cost $153 million. All-in sustaining costs are estimated at $580 per ounce. Barrick aims to start work on the expansion in 2019 or 2020, with production to start in 2022 or 2023.

If the project goes forward, the Deep South zone could produce approximately 1.7 million ounces of proven and probable reserves, Barrick said. Yields could hit 300,000 ounces per year for the four years between 2022 and 2026, Barrick suggested.

The limits of the underground deposit have not been defined. However, Barrick claims drilling has indicated potential for new targets at depth.

At its long-term gold price estimate of $1,200, Barrick’s production goal of 300,000 ounces per year represents $360 million in gross proceeds.

2017-08-28T10:37:08+00:00