Barrick aims to take top spot in gold production

The world’s top gold producer — that’s the title Barrick Gold (TSE) hopes to win in the years ahead through key acquisitions, worldwide exploration and a network of joint ventures.

Chairman Peter Munk told shareholders at the annual meeting that while Barrick has climbed to third place worldwide (having reached an annual production rate of 3.1 million oz. in just over 10 years), it does not intend to rest on past glory.

“We have had a great amount of luck, but you can’t count on that factor in the next decade,” he said. “We will have to double and triple our efforts.” The company intends to become more active internationally, though it will remain focused exclusively on gold and be increasingly selective about where it operates. “I believe that is one of our keys to success,” Munk said. “We can’t be all over the map, geographically and in the minerals we produce.” Barrick President Robert Smith, described as “semi-retired,” will continue to help the company direct its growth plans, while day-to-day operations will be handled by John Carrington, chief operating officer.

Carrington stressed that the company will concentrate on gold belts with potential to host deposits with at least 2 million oz. of reserves. The immediate focus will be on exploring and expanding existing operations in Nevada’s Carlin Trend and Chile’s El Indio belt.

Barrick management has spent much of the past year enhancing the value of properties acquired through the acquisition of Lac Minerals, namely the project known as El Indio, which has two producing mines: El Indio and Tambo.

By February of this year — 18 months after the Lac purchase — the company had doubled reserves to 3.4 million oz. from 1.8 million oz. in the original Esperanza deposit. This was achieved through the discovery of a new deposit, being developed as the Pascua mine.

Pascua is scheduled for production in late 1998, at a rate of 300,000-400,000 oz. annually, with its own processing facility. At the meeting, Carrington announced that ongoing work since February had boosted total reserves to 6.5 million oz. — more than triple the total at the time of acquisition.

Barrick also sees potential to increase reserves elsewhere at El Indio, although development work is expected to take longer than surface exploration because the targets are vein systems.

Meanwhile, exploration continues at the company’s Goldstrike property, which this year is expected to produce 2 million oz., or more than 60% of the company’s total production. This Nevada project also holds the bulk of Barrick’s total reserves of 43.3 million oz.

This year, Barrick intends to follow up promising surface drill results from the Rodeo and Griffin deposits (near its Meikle mine in Nevada) and continue work with partner Newmont Gold at the High Desert property, 2 miles from Goldstrike. Barrick holds a 40% interest in the property, where several million ounces of gold have already been outlined.

Farther afield, Barrick has acquired a large and growing land position in Chile, Peru, Argentina, Bolivia and Brazil. “In Asia, we are most active in Indonesia, which fits our expansion strategy well. Including our interest in a large, prospective block of properties in Kalimantan, we now have a total of nine properties in Indonesia,” Carrington said.

The company is also active in China and the Philippines, and a land package has been assembled in Mali and Niger, West Africa.

Barrick has lined up a $1-billion line of credit in order to be able to respond quickly to acquisition opportunities that may emerge worldwide.