Barrick’s future hinges on Goldstrike

Reserves at Goldstrike now stand at 142.8 million tons grading 0.106 oz gold in the proven and probable categories. Combined with possible reserves of 13.2 million tons averaging 0.07 oz, Goldstrike represents over 85% of the company’s reserve base.

Reporting record earnings for 1988 of $37.5 million(US), Barrick predicted in its annual report that the major expansion program under way at Goldstrike and its unique price hedging program will assure that “both its financial strength and earnings will continue to increase in future years.”

Barrick has developed a definitive mine plan for the Goldstrike reserves which now stand at 16 million oz, enough to “achieve and maintain a production rate of one million ounces per year,” the company said.

As of Dec 31, some 75% of its production for the next three years has been hedged at an average price of $434(US) per oz and Barrick has protected most of the upside potential through an options program. Earlier this year, the company arranged a 1,050,000-oz gold loan which will be used to finance development of the Goldstrike mine.

“The amount of cash to be realized from the initial drawdown of 750,000 ounces of this facility will be more than sufficient to finance the full development of the project,” the company said.

The $365-million capital program announced in January to develop the Post Surface and Betze reserves will see annual production at Goldstrike increase to 900,000 oz in 1992 and to one million ounces by 1996.

Over the next four years, major expenditures will include $79 million for mining equipment, $167 million for milling facilities, $77 million for other expenditures including the tailings dam and dewatering facilities, and a 13% contingency of $42 million.

The mining rate is expected to exceed mill capacity through Goldstrike’s operating life, the result being that a large, lower grade (0.1 oz) stockpile of about 24 million tons will be created. High grade ore will be selectively milled in earlier years and the stockpile will be milled after the Betze pit is completed in the year 2000.

A decline ramp was put down in the south wall of the Betze pit last year for dewatering purposes and to access sulphide ore. After reaching the 2,307-ft mark, dewatering studies and other test work demonstrated the ramp was no longer required for dewatering purposes. Sulphide reserves were also delineated in the Winston pit (about one- half mile southwest of the Post surface pit) which will be available for startup of the first autoclave.

Current production at Goldstrike comes from near surface oxide reserves which are either heap leached or milled conventionally. Two years from now, production will come mainly from the Betze sulphide zone which will have to be pre-treated through pressure oxidation or autoclaving to yield recoveries of 87%.

By next year, 25% of the company’s 6,000-ton-per-day oxide mill will be converted to treat sulphide ore; six autoclave units will be required to reach full capacity of 12,750 tons in 1993. (Autoclaving is nothing new to Barrick as it utilizes the process technology at its Mercur gold mine in Utah).

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