Nevada gold mine forms foundation for Barrick

After producing 115,000 oz gold last year, it nudged ahead of the Mercur mine in Utah as the biggest gold producer in Barrick’s portfolio of seven gold mines. With 130 million tons of grade 0.11 oz gold per ton (14.9 million oz) Goldstrike is now firmly established as the cornerstone on which the company will build its future.

As reported (N.M., Jan 16/88) Barrick expects to recover 10.4 million oz from the Post surface and Betze deposits via a huge open pit. When complete it will span an area measuring the equivalent of 370 football fields and sink to a depth that is greater than twice the height of Toronto’s tallest skyscraper.

Measuring 6,000 ft long, 4,000 ft wide and 1,650 ft deep, it will span neighbor Newmont Gold’s Post claims and allow Barrick to accelerate its Goldstrike production rate to a minimum 900,000 oz by 1992. Surface oxides

“The development plans will not entail any underground mining,” Smith told The Northern Miner recently. Instead the company will mine the remainder of the surface oxide reserves (grading about 0.04 oz) which have sustained the operation since it began in 1979. The oxide ores are currently being treated in a 4,500-ton-per-day carbon-in-leach mill which was completed last year at a cost of $27 million(US) in just seven months. Previously gold was recovered through the heap leaching process which involves spraying cyanide solution over huge ore piles.

Work has already begun on a 1,500-ton-per-day autoclave unit which will handle the Goldstrike sulphide ores when it is up and running in 1990.

Strip ratio is expected to be about 6 to one and Barrick will have to contend with an 85,000 gallon-per- minute water flow problem. Regarded as a minor impediment by Smith, the boiling water will be collected in a number of deep wells and pumped to a nearby reservoir.

The Goldstrike expansion program will swallow up most of the $189 million which Barrick has set aside this year for capital expenditures. It will also demand the attention of Smith who jets down to Elko from Nevada at least once a week to oversee the operation. Hectic pace

But the 56-year-old Barrick president remains undaunted by the hectic pace. “It’s only once in a lifetime that you get involved in a deposit like this,” said Smith who is also keeping an eye on the development of the company’s other projects. Combined with Goldstrike they produced 335,000 oz in 1988.

While it has been dwarfed by events in Nevada, the new Holt- McDermott mine near Kirkland Lake, Ont., has distinguished itself by being the first gold producer which Barrick developed all the way from grass roots to start-up.

Production got under way last July. After some initial teething problems it is running at full speed and should churn out about 80,000 oz gold this year. With costs at about $225(US) per oz, it is becoming a reasonably efficient mine, Smith said.

Barrick recently opened up two new stopes on the 200-m level and work is now under way to develop the Three Star and Worvest deposits which lie about 3,000 ft west of the Holt McDermott shaft. Mill head grades are now at a comfortable 0.16 oz gold per ton and should remain at that level for the seven years which known reserves will sustain. Camflo mine

Much of the know how which Barrick used to develop the Holt- McDermott was garnered at the Camflo mine near Val d’Or, Que., which Smith said is well past its prime. No longer capable of producing 75,000 to 90,000 oz per year it is now chugging along at a more modest 30,000 oz. With three years of reserves remaining, there is still time to develop new ore and exploration will focus on a number of diorite zones on the 900 ft level and the adjoining Malartic Hygrade Gold property.

After drilling 69,000 ft during the past 12 months at the Pandora property near Cadillac, Que., Barrick has outlined 2.5 million tons grading 0.14 oz in drill-indicated geological reserves.

The Pandora is a joint venture involving Barrick and Queenston Gold Mines (TSE) but a decision on whether to go underground won’t be taken until Barrick has completed another 15,000 ft of drilling.

With the emphasis clearly on development, Barrick’s near-term growth rests largely on the technical expertise of Smith and his mining staff. But that doesn’t mean that Chairman Peter Munk will relax his grip on the company. Hotel chain

Despite speculation in investment circles that the former head of a Pacific hotel chain will turn his attention to new ventures, Munk said he will continue to call the tune as Barrick begins to tap into more of the vast gold reserves at its Goldstrike mine in Nevada.

“Barrick has never been my sole occupation,” said Munk who recently acquired control of St. Louis-based Apex Oil and Gas, which ranks as the fifth largest privately owned company in the United States. “I have always maintained a broad range of interests and my contribution to Barrick will not change one iota,” said Munk.

Financing an ambitious development program at the Goldstrike mine will demand much of his attention during 1989, Munk told The Northern Miner. So too will an ownership dispute over the Mercur Gold mine in Utah.

Utah-based Gold Standard which holds a 15% net profits interest in Mercur is claiming full recession of the mine and all the gold produced (about 500,000 oz) since it went into production in 1983. The Utah company filed a lawsuit in 1986 against Texaco Inc., former joint venture partner Getty Oil and American Barrick for what it calls a breach of fiduciary by Getty. Mercur suit

Gold Standard says an incomplete feasibility study conducted by Getty resulted in the improper conversion of its 25% participating interest to a 15% net profits interest. Gold Standard is fully financed for a lengthy court battle and when the case is heard in a Tooele Cty., court next February it will attract considerable attention.

Barrick has said all along that the case has no merit and even if it were to lose, Munk says the impact on his company will be minimal.

Expansion at Goldstrike combined with production from Barrick’s other gold mines means that by the time a decision is announced Mercur will represent only 10% of the company’s total gold production.

But the lawsuit is clearly something that Munk could do without. “It’s an irritation,” he said. “It seems you can’t do business in the United States without that kind of nonsense.”

If Gold Standard was awarded all the Mercur gold produced so far, Munk said Getty and Texaco would be responsible for any damages and the Utah company would have to provide its share of development costs.

Meanwhile Munk’s objective is to continue to create a well financed all-American gold company and to minimize Barrick’s exposure to fluctuating gold prices. Since he formed the company in 1983, Munk says he has become more of a team player than a leader. But others in the company say he is clearly the man in charge.

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