After four months of discussions, American Barrick Resources and

Gold have outlined the terms of a joint venture agreement to mine the surface oxide and deeper sulphide reserves of the Post deposit in Elko Cty., Nev. Located on the famed Carlin gold trend where Newmont is producing from five open pit mines, the Post deposit straddles property belonging to both companies.

It is situated at the north end of Barrick’s Goldstrike property which consists of 6,870 acres represented by 21 blocks of unpatented lode mining claims and on a group of Newmont claims which remain relatively unexplored.

Barrick acquired the Goldstrike claims from Western States Minerals and Pancana Minerals in December, 1986. As reported (N.M., Aug 10/87), the former owners were producing around 40,000 oz annually by heap leaching low grade oxide surface ore.

Earlier this year, Toronto-based Barrick caused a sensation when it released the results of a hole drilled to 2,000 ft below the Post claims. Containing 620 ft of 0.3 oz, it sent Barrick’s share price rocketing from $3.13 to $39.29.

Surface reserves on American Barrick’s side of the Post deposit currently stand at 20 million tons of 0.053 oz per ton proven and probable. Since Newmont’s share of the deposit is much larger, exploration is expected to establish reserves which are correspondingly greater, according to Jerry Garbutt, Barrick’s chief financial officer.

While details of the agreement have yet to be finalized, Mr Garbutt says Newmont and Barrick will mine their respective reserves from a huge open pit and mill from two separate locations.

“Each company will be charged with mining its own ore but the work will be done on a joint venture basis. It’s cheaper for both companies to mine from one pit instead of having a ridge straddling the two properties,” said Mr Garbutt who expects the open pit to have a life-span of around 10 years .

He says construction will begin immediately on a 3,500-tpd mill allowing Barrick to increase its gold production from the surface reserves to 120,000 oz in 1988 and 160,000 oz in 1989.

To process high grade, deep sulphide reserves, the company says it will also construct a second mill with an autoclave circuit and 3,000 to 5,000-tpd capacity.

Underground mining at the Betze deposit will increase Barrick’s production by a further 300,000 oz annually. Located 3,000 m northwest of the Post, the Betze will be mined first because its reserves do not encroach onto Newmont property.

According to Barrick, recent drilling has significantly increased reserves at the Betze deposit and its portion of the deep Post deposit. Later this year, the company plans to sink a shaft which will provide access to both deposits.

Barrick says using a cutoff grade of 0.15 oz gold per ton, probable and possible known reserves at the deep Post deposit are 2.8 million tons grading 0.39 oz and 2.7 million tons of 0.40 oz. The estimates at the Betze deposit have also been revised with recent drilling.

They now stand at 3.7 million tons at 0.22 oz probable and 4.2 million tons of 0.21 oz possible.

While the portion of the deep Post deposit on Barrick property is reasonably well defined, the limits of the Betze deposit have yet to be determined, according to Mr Garbutt.

During 1987, American Barrick expects to produce 240,000 oz gold from its six producing mines in Ontario, Quebec, Utah, Nevada and Alaska. Of that, 52,000 oz will come from Goldstrike.

Although the two companies shook hands on the Post agreement one day after T. Boone Picken’s attempt to acquire control of Newmont Mining Corp. (see story Page 14), Mr Garbutt says the two events are not necessarily connected.

“The Pickens bid may have made Newmont Gold (a 90% owned subsidiary of Newmont Mining) more aggressive, but our respective interests in Nevada means a similar agreement would eventually have been concluded anyway,” he said.

“The agreement means Barrick can accelerate development of the property and neither Newmont nor Barrick will lose any revenues during production.”

News of the agreement sent Barrick’s shares up $3 this week to close at a new 52-week high of $34.50 on the Toronto Stock Exchange. In a busy week for the Toronto company, Barrick also received a New York Stock Exchange listing.

Earlier this week, the issue closed in New York at $26(US) on 404,900 shares traded.