NEVADA & THE WESTERN STATES — Goldstrike keeps on trucking — Barrick focuses on ‘mile-long corridor of mineralization’

Few mineral properties are as aptly named as Barrick Gold‘s (ABX-T) Goldstrike, in Nevada’s prolific Carlin trend.

The property’s two operating mines, Betze-Post and Meikle, are expected to churn out more than 2.1 million oz. of the yellow metal at a cash cost of US$188 per oz. this year. Yet the exploration story is far from over, with ongoing work focused on deep drilling below existing deposits and testing of a mile-long corridor of mineralization, stretching from the Meikle mine in the north, through the Griffin and Rodeo deposits, to the newly acquired Goldbug deposit to the south.

“We’re encouraged by what we’ve found at Meikle,” Vice-Chairman John Carrington told shareholders at the company’s annual meeting. “We’ve also had significant drilling success along the 5,000-ft. decline that connects Meikle and the Rodeo exploration shaft.”

The potential of the Goldstrike property was recently enhanced by a land swap with neighbouring miner Newmont Mining (NEM-N). The “ounce-neutral” exchange is viewed as a “win-win” transaction as both companies believe they will be able to achieve greater value from the assets than before.

“This deal improves the exploration potential of Goldstrike and will lead to significant operating synergies and lower costs,” Carrington told shareholders. “I want to reassure you, this is a significant deal for Goldstrike.”

Under the deal, Barrick received:

• the land corridor separating the Betze-Post and Meikle mines on the Goldstrike property;
• the Goldbug deposit (hosting 1.1 million contained ounces gold) adjacent to the company’s Rodeo deposit at Goldstrike;
• Newmont’s reserves of 860,000 oz. in the Betze-Post open pit; and
• the Banshee property, north of the Meikle mine.

  Newmont received:

• Barrick’s portion of the underground Deep Post deposit;
• Barrick’s 40% interest in the High Desert property;
• the land corridor between the Deep Post and Deep Star deposits; and
• a stockpile of low-grade ore.

Carrington says Barrick also is excited about the exploration potential of the nearby Rossi and Dee properties. “We think they may host more Meikle-type ore.”

The Meikle mine set new records in 1998 — its second full year of operation — when it turned out 850,000 oz. at US$77 per oz. This represents a 50% production increase from 1997, as well as a 25% reduction in cash costs.

The underground mine is expected to produce 1 million oz. gold this year at US$75 per oz., well below Goldstrike’s average cash cost, and this year’s grade is projected to average 1 oz. per ton, well above the 0.25 per oz. average grade at Betze-Post.

Meikle’s exceptional profitability has allowed the company to recover the US$180-million capital cost within about 2.5 years from startup.

By year-end, Barrick expects to have completed the shaft-deepening at Meikle to allow development of the lower portion of the Main zone, as well as more exploration. The Rodeo exploration shaft and the gallery linking the Rodeo and Griffin deposits to the Meikle mine have already been completed.

The first phase of this year’s exploration effort at Goldstrike will include a 25,000-ft. drill program for Griffin, 35,000 ft. at Rodeo and 25,000 ft. at Meikle. A second-phase program of between 40,000 and 60,000 ft. of drilling will follow, aimed at delineating these deposits.

Barrick estimates it will cost US$20 million to bring the Griffin deposit into production at 500 tons per day next year, with ore hoisted through the Meikle shaft. The deposit, which grades an average of 0.41 oz. gold per ton, will be mostly mined by open stoping.

Rodeo, which has an average grade of 0.55 oz. gold, is expected to come on-stream in 2001. It will be mined by a combination of open-stope and drift-and-fill, owing to its variable ground conditions.

Both the Rodeo and Griffin deposits have carbonaceous ore that will require roasting.

Barrick is currently building a US$330-million roaster to handle the Goldstrike property’s estimated 12 million oz. of carbonaceous ore. Once completed in mid-2000, the roaster is expected to cut overall processing costs by 10% and increase the total processing capacity at Goldstrike to more than 39,000 tons per day.

At the end of 1998, total reserves at Goldstrike stood at 27.3 million contained ounces. North reserves (including Meikle, Griffin and Rodeo) increased to 6.1 million oz., a net increase of 837,000 oz. over the prior year, while reserves at Betze-Post declined to 21.1 million contained ounces from 24 million oz. a year earlier (this estimate includes a recalculation of reserves at US$325 per oz., which reduced reserves by 1.2 million oz.).