Barrick, Falco team up in Tanzania

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

Falco 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 an additional US$13.5 million along the way.

Barrick acquired Kabanga, along with the Bulyanhulu gold project, also in Tanzania, through its takeover of Sutton Resources in 1999. Kabanga is 385 km west of Bulyanhulu and 100 km northwest of the 70%-owned Tulawaka gold mine, where construction recently began. 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 being updated. 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.

“We’re delighted to have Falconbridge participating with us in the Kabanga project,” says Barrick CEO Greg Wilkins. “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 new gold projects.”

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 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 Falco intend to carry out geophysical surveys and an initial, 70,000-metre program of exploration drilling on Kabanga deposit and other targets in the Kagera belt. The work will contribute to a feasibility study.

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-earlier income of US$54 million (10 a share) on $526 million. The improvement reflects higher precious metal prices and gains from derivatives.

For its part, Falco earned US$94.3 million (51 a share) in the fourth quarter, on revenue of US$637 million, compared with a year-earlier profit of US$23.2 million (12 a share) on US$443 million. The increase was powered by the turnaround in nickel and copper prices.