Barrick goes on spending spree in PNG

Barrick Gold (ABX-T, ABX-N) is quietly padding its treasure chest in resource-rich Papua New Guinea.

A little more than two months after it raised its stake to 95% in the Porgera gold mine property in the countrys rugged highlands, it has purchased the Kainantu gold mine and more than 2,900 sq. km of exploration licenses from Highlands Pacific (HGL-A).

With this latest US$141.5 million acquisition, Barrick will have access to more than 5,300 sq. km in one of the most highly endowed gold and copper regions in the world.

The acquisition is a further reflection of the long term, multi-million ounce potential we see in Papua New Guinea, Alex Davidson, Barricks executive vice president of corporate development and exploration, said in a prepared statement.

Barrick plans to launch an exploration program on identified high grade gold vein targets and indicated copper-gold porphyry potential in the district.

The Kainantu gold project is in PNGs Eastern Highlands province and consists of the Irumafimpa deposit and the Kora mineral resource.

According to Highlands Pacific, the total geological resource at Kainantu is 3.1 million tonnes grading 20.2 grams gold per tonne and containing 2.0 million oz gold.

The Irumafimpa ore reserve is 1.3 million tonnes grading 16 grams gold per tonne containing 655,700 oz of gold. The Kora mineral resource is estimated at 900,000 tonnes grading 29 grams gold per tonne and containing 820,000 oz of gold.

Production last year reached 104,000 tonnes grading 8 grams gold per tonne for 21,094 oz. gold recovered. The process plant averaged 87% recovery of gold into concentrate against a design level of 98%.

Highlands Pacific estimates that the mine will produce about 110,000 oz. of gold per annum over a mine life in excess of six years.

Kainantu is an underground mine with narrow, steeply dipping gold bearing veins.

Meanwhile at Barricks Porgera gold mine in the highlands of Enga province, 600 km northwest of Port Moresby, production in 2006 reached about 542,000 oz. gold. The mine has proven and probable reserves of 9.42 million oz.

Barrick acquired its original 75% interest in Porgera after completing a hostile takeover of Placer Dome in January 2006.

Porgera is being mined using open-pit and underground methods. Last year underground ore accounted for 30% of the contained gold in mill feed, Barrick states on its website.

Rich in gold, copper and silver, the mining sector contributes about 60% of PNGs exports and 20% of its fiscal revenues, according to the World Bank.

The World Bank estimates that GDP growth this year fuelled by the commodity boom — will range between 4-5 percent, up from 2.6% in 2006.