Barrick updates news on South American projects

Barrick Gold (ABX-T, ABX-N) has completed nearly 90% of the detailed engineering and procurement work at its Pascua-Lama project bordering Chile and Argentina and is on track to start production there in the first quarter of 2013.

The project remains in line with its pre-production capital budget of about US$3 billion and Barrick has committed more than 40% of the capital. Roughly 6.8 million cubic metres of earth has been moved so far and the major earthworks for the mill and Merrill Crowe platforms should be finished some time this month, the company said in a news release announcing its quarterly results on Oct. 28.

The gold major’s Barriales camp in Chile is substantially complete, which means the workforce there can be increased to the permitted capacity, and initial occupancy of the Los Amarillos camp in Argentina is expected to start in the fourth quarter of this year. In the first full five years of production Barrick forecasts average annual gold production from Pascua-Lama should reach 750,000-800,000 oz. gold.

Meanwhile, about 10 km south of the Pascua-Lama project, Barrick’s open-pit Veladero mine in Argentina outperformed the company’s expectations in the third quarter.

The mine, about 374 km northwest of the city of San Juan, produced 0.36 million oz. gold at total cash costs of US$250 per oz. on higher grades from the Amable and Filo Federico pits.

Barrick expects Veladero will produce over one million ounces of gold this year. (Last year the mine turned out 611,000 oz. gold at total cash costs of US$438 per oz.) Proven and probable mineral reserves (as of Dec. 31, 2009) were estimated at 12 million oz. gold.

Back in Chile at Barrick’s Cerro Casale project, about 20%of the detailed engineering work has been completed. Barrick anticipates pre-production capital will come in at about US$4.2 billion (100% basis) and Barrick’s 75% share of average annual production is forecast to fall in the range of 750,000-825,000 oz. gold and 170-190 million lbs of copper in the first full five years of operation at total cash costs of about $240-$260 per oz.

Currently Barrick is reviewing permitting requirements before considering a construction decision and is also holding discussions with the government and local communities and indigenous groups.