Barrick find lost in shuffle

Lost in the shuffle during the recent takeover of Placer Dome is a new gold discovery Barrick Gold (ABX-T, ABX-N) has made along the prolific Carlin trend in Nevada.

Towards the end of October last year, Barrick reported significant results from drilling on the South Arturo prospect at the past-producing Dee property in Elko Cty., northeastern Nevada. At the time of the announcement, eight holes had been drilled in an area measuring 1,000 by 1,500 ft., and all had intersected “significant” oxide gold mineralization at depths between 300-400 ft. and 600-700 ft. below surface.

A north-south-oriented, 1,250-ft.-long cross-section through the deposit, representing four widely spaced reverse-circulation (RC) holes, was highlighted by: a cumulative 550 ft. averaging 0.028 oz. gold per ton in hole 72, 640 ft. of 0.048 oz. in hole 73, 350 ft. grading 0.142 oz. in hole 75, and 35 ft. of 0.052 oz. in hole 81.

The average grade and thickness of the first eight holes is about 80 ft. of 0.052 oz. (or 24 metres of 1.78 grams), at a cutoff grade of 0.006 oz. Some of the holes bottomed in oxide mineralization. Core drilling has confirmed these RC holes, with one of the core holes returning 396 ft. of 0.089 oz.

By year-end, 28 holes totalling 13,332 metres were completed, and all had intersected oxide mineralization. A measured and indicated resource for the new discovery was conservatively calculated by Barrick at 158,000 oz., based on preliminary open-pit modelling and a gold price of US$450 per oz. Alex Davidson, Barrick’s executive vice-president of exploration and corporate development, says there are many more ounces on an in situ basis, with the additional ounces falling into the inferred category.

“We’re looking at South Arturo being a much bigger resource than that (158,000 oz.) at the moment,” Davidson told analysts during a year-end conference call. In fact, Barrick president Gregory Wilkins went further at the BMO Nesbitt Burns Global Resources conference in March, saying that the deposit has multimillion-ounce potential.

The Dee property is a joint venture held 60% by Barrick, the operator, and 40% by Glamis Gold (GLG-T, GLG-N). The property consists of 6.3 sq. miles of unpatented mining claims and lies immediately south of the Rossi property, held 60% by Barrick and 40% by Meridian Gold (MNG-T, MDG-N), and immediately northwest of Newmont Mining’s (NMC-T, NEM-N) Bootstrap property.

Barrick has been exploring the Dee property since 1998 under an option agreement with Rayrock Resources. Glamis acquired its stake in 1999, as part of its takeover of Rayrock. In June 2004, Barrick completed its earn-in of a 60% share by spending US$6.5 million on exploration.

The first intercept on the South Arturo zone was made in June 2005. The newly discovered zone is southeast of the Storm deposit, which is on the Rossi property, and immediately southeast of the Dee open pit.

The South Arturo mineralization is described as a classic, “Carlin-style,” hosted in oxidized Upper and Lower plate Paleozoic sedimentary rocks.

“Fire assay and cyanide assay ratios indicate recoveries of 86% on this material, so we’re quite pleased with the oxide nature of this ore,” Davidson said.

There are currently four drills turning on the Dee property, including three RC rigs and one core rig.

“We’ve had good results in both January and February, extending the high-grade core of the oxide to the north, and some encouragement off to the east,” Davidson remarked.

So far, the mineralization in all of the holes is oxidized.

“We haven’t had any disappointment and we are aggressively going to be pursuing that this year,” Wilkins said.

The joint venture spent US$4 million at Dee in 2005 and plans to spend at least US$5 million on South Arturo in 2006, with the focus on both infill drilling and expanding the resource.

Barrick is also busy on the adjoining Rossi property, a 60/40 joint venture with Meridian Gold. The Rossi property spans 10.8 sq. miles on the northern end of the Carlin trend and hosts the Storm deposit, a structurally controlled refractory gold deposit that occurs at depths of 650 to 2,100 ft. in the southwest corner of the property, adjacent to the Dee open pit.

At the end of 2004, Storm was estimated to contain measured and indicated resources of 608,000 tons grading 0.45 oz., equal to 272,843 oz. gold, with additional inferred resources totalling 884,000 tons at 0.38 oz., or 332,163 oz. Barrick continued its underground exploration work at Storm in 2005. According to Davidson, drilling continued to intercept half-ounce material across 50-60 ft. outside of the previously defined deposit. About 55 underground holes were drilled for a total of nearly 7,000 metres. In addition, some test-mining samples were processed through Barrick Gold’s facility with success.

Meridian Gold reported in its year-end results that prefeasibility work completed during 2005 confirmed the economic viability of the Storm project. Final feasibility work is expected to be complete in 2006.

Globally, Barrick spent about US$120 million on exploration in 2005, half of which was directed towards its near-mine portfolio. The other half was spent on greenfield and district exploration. These prospective districts include Nevada, Frontera, which straddles the Chile-Argentina border, Lake Victoria in Tanzania, Peru and Russia.

In the United States, Barrick is exploring about 35 opportunities in Nevada, spending about US$25 million in 2005. Much of that work was focused on the Goldstrike district along the Carlin trend, and Ruby Hills on the Battle Mountain-Eureka trend.

“The most valuable assets in the world are the ones that we find in Goldstrike and Nevada,” Wilkins said. “Goldstrike is this core, cash-flow generator for the company, with tremendous reserves and technology and investment and infrastructure, to the extent that we can continue to replace reserves and find new opportunities out there to utilize that infrastructure and generate great value for the company.”

He added the company is reinvesting in exploration at Goldstrike.

“We still believe that there is great opportunity (there),” he said.

The Goldstrike operations produced 2.2 million oz. in 2005 at a total cash cost of US$255 per oz., compared with 1.9 million oz. at US$250 per oz. in the previous year. Proven and probable reserves at year-end totalled 121.8 million tons grading 0.143 oz. for a contained 17.4 million oz. Additional measured and indicated resources are estimated at 24.3 million tons of 0.095 oz., or 2.3 million oz.