Barrick, Falconbridge to team in Tanzania

Odd couple Barrick Gold (ABX-T) and Falconbridge (FL-T) have agreed to jointly explore and develop the Kabanga nickel deposit in Tanzania.

Under the agreement, Falconbridge can take a half-interest and assume the role of operator by funding US$45 million worth of work, completing a feasibility study within three years, and paying another US$13.5 million along the way.

Barrick inherited Kabanga, along with the more prized Bulyanhulu gold project, also in Tanzania, via its takeover of Sutton Resources in 1999. Kabanga is situated about 385 km west of Barrick’s Bulyanhulu mine and some 100 km northwest of the 70%-owned Tulawaka gold project, where construction recently commenced. Montreal-based Explorations Minires du Nord (MDN-T) owns the remaining 30% of Tulawaka.

Inferred resources at Kabanga stand at 26.4 million tonnes grading 2.6% nickel. The deposit remains open at depth, and the resource is currently being updated. Barrick says the nickel-sulphide mineralization at Kabanga is associated with ultramafic bodies intruded into metasediments in a geological setting comparable to the Thompson nickel belt in Manitoba.

Says Barrick’s CEO, Greg Wilkins: "We are delighted to have a world class fully-integrated nickel producer like Falconbridge participating with us in the Kabanga project.”

“Their technical expertise, downstream facilities and intimate knowledge of the nickel market will continue to increase the potential of the Kabanga project and the Kagera belt while allowing us to focus on building our five new gold projects,” he adds.

Falco is teamed with Donner Minerals (DML.V) at the Stephens Lake Project in Manitoba, where a $1-million work program is set to begin. Plans call for electromagnetic and magnetic ground geophysical surveying plus 3,000 metres of drilling in 10-12 diamond drill holes. Drill will begin in early March.

The pair are focussed on exploring the Circum-Superior boundary, northeast of Thompson, for magmatic nickel, copper and platinum group element deposits. Previous drilling on the 4,400-sq.-km project cut both sulphide iron formation and ultramafic rocks have been separately intersected in diamond drilling.

Donner can earn a half-interest in the project by spending $5 million over five years. Also under the deal, Falco will subscribe for $500,000 worth of Donner shares.

Falco head Aaron Regent says the Kabanga deal gives his company additional high-quality nickel sulphide resources while allowing it to diversify nickel production and to deploy feed to its smelting and refining facilities.

The agreement is subject to Falconbridge’s due diligence and the negotiation of definitive agreements.

Barrick and Falconbridge plan geophysical surveying and an initial 70,000-metre exploration drill program focussed on the Kabanga deposit and other targets in the Kagera belt. The work will go toward completing a feasibility study within the three-year option period.

On the financial front, Barrick recently posted fourth-quarter earnings of US$77 million (or 14 per basic and diluted share) on revenue of US$536 million, compared with year-ago income of US$54 million (10 a share) on $526 million. The improvement is thanks to higher precious metal prices and gains from derivatives.

Falco’s recent fourth-quarter earnings came to US$94.3 million (51 a share) on US$637 million, compared with year-ago earnings of US$23.2 million (12 a share) on US$443 million. The increase was powered by the turnaround in nickel and copper prices.