Goldstrike exceeds 2m oz. for sixth straight year

Goldstrike in Nevada’s Carlin trend is much more than Barrick Gold‘s (ABX-T) flagship gold operation; it’s a world-renowned mining camp that has produced more than 18.6 million oz. since operations began in the 1980s. It’s also a work in progress, with 25.4 million oz. still waiting to be mined, and, in all likelihood, millions more untapped.

Barrick bought the sagebrush-covered property in 1986, when reserves were a modest 600,000 oz. gold from open-pit deposits. Last year, Goldstrike produced a whopping 2.4 million oz. gold at a total cash cost of US$170 per oz., and generated free cash flow of US$315 million. Feed came from the original Betze-Post open pit, and from the newer Meikle mine, which includes the Rodeo and North Betze underground deposits. It was a record year for both production and cash flow, as well as the sixth consecutive year that the property had surpassed the 2-million oz. production level.

Production this year is expected to decline slightly to 2.3 million oz., mainly due to lower processing grades. Cash costs will rise to about US$197 per oz. as more gold is produced at Betze-Post, as opposed to the higher-grade Meikle mine. Like most producers in Nevada, Barrick is also feeling the pinch of higher power costs.

Despite the reduced budget expectations for 2001, Goldstrike’s production in the first quarter reached 613,478 oz., up 22% from a year earlier, owing to the completion of a new roaster facility.

Barrick says its new roaster has been “an outstanding success” since it was commissioned earlier this year, on time and on budget. It is expected to lower costs, increase flexibility, and add another 12,700 tons of capacity to Goldstrike’s daily processing capabilities.

The existing facilities, which together handle 29,500 tons from the Betze-Post and Meikle mines, consist of an autoclave system to handle non-carbonaceous ores, and a roaster to handle carbonaceous ores.

Later this year, Barrick will begin production from the 5-million-oz. Rodeo deposit of the Meikle mine, situated about a mile north of Betze-Post. This portion of the Goldstrike property has come a long way since the first underground deposit was discovered in 1989. In the latest quarter, Meikle contributed 161,832 oz. gold at a cash cost of US$115 per oz. Production for the rest of the year is expected to remain consistent from quarter to quarter, and to total 669,000 oz. at a cash cost of US$137 per oz.

Rodeo should contribute about 66,000 oz. to the mine’s total production, mainly in the fourth quarter. Exploration for additional reserves is ongoing, though an exploration drift to the nearby Banshee target has been deferred until the mineralized zone is better-defined. Meanwhile, exploration continues to focus on the deep potential of the Main Meikle mine, and on the Barrel area, west of Rodeo.

The Goldstrike property also has potential for reserve expansion, north and west of the Betze-Post open pit. At the end of 2000, reserves at Betze-Post stood at 18 million contained ounces. It remains the largest contributor to Barrick’s bottom line, with 1.6 million oz. produced last year at a cash cost of US$195 per oz.

First-quarter production was 451,646, 37% more than in the first three months of 2000, reflecting the additional capacity provided by the roaster and higher grades.

Barrick’s goal this year is to boost overall production to a record level of 3.8 million oz. at a cash cost of US$156 per oz. A significant portion of the increase will come from the company’s new Bulyanhulu mine in Tanzania.