Over the first 15 years of operations, Bulyanhulu is now expected to produce an average of 400,000 oz. annually at a cash operating cost of US$130 per oz.
However, production will start at an annual rate of 300,000 oz. and at a cash operating cost of about US$160 per oz. before achieving 500,000 oz. in the tenth year.
A 93,000-metre drill program is trying to more than double Bulyanhulu’s reserve base to 8 million oz. by year-end. When Barrick acquired the project in the spring, reserves in the key structure, Reef 1, stood at 10 million tonnes grading 11.65 grams gold per tonne, equivalent to 3.8 million contained ounces.
“There is tremendous potential for increasing the reserve base, and this is really what attracted us to the property in the first place,” Vice-Chairman John Carrington told a media conference in Toronto. “The geology is very regular, so we don’t anticipate any difficulties with this mine.”
The Toronto-based major has embarked on a US$280-million capital development plan that will bring the Bulyanhulu mine into production by early 2001.
Barrick has already awarded major contracts for engineering, shaft-sinking and underground development. Stopes will be accessible via a 6.4-metre-diameter, 1,100-metre shaft and three ramps developed from surface. Ore will be mined by long-hole and drift-and-fill methods.
In the fourth quarter, construction will begin on a 2,500-tonne-per-day processing plant, which will employ gravity separation followed by flotation of a small amount of copper.
In developing the first modern underground mine in Tanzania, Barrick will be facing an acute shortage of skilled local workers.
“There aren’t any miners in Tanzania, and that’s one of the challenges that we have,” said Carrington.
The company is currently using contractors from South Africa but will soon begin training Tanzanian miners and other new Barrick employees.
Already, there are 700 employees and contractors working at site, 90% of whom are Tanzanian.
“There’s a tremendous amount of lateral development work to be done,” added Carrington. “We want to be able to produce as soon as we can at a reasonable level, so the next year and a bit will be all stope preparation and development work.”
By the time the new mill is completed in the second quarter of 2001, Barrick will have stockpiled enough ore and developed enough working places to begin feeding the mill at its design rate.
Four smaller reefs on the Bulyanhulu property are not part of the current development plan, though, in time, reefs 0 and 2 will be further explored and possibly mined.
Barrick is in the midst of arranging project financing for about two-thirds of the project’s capital-development costs, with the deal expected to be completed by early next year. President Randall Oliphant said Barrick has had favourable responses from several major banks, as well as international developement agencies.
The major acquired Bulyanhulu through a US$281-million, all-share bid for Sutton Resources in March 1999 (T.N.M., March 1-7/99).
“Barrick has always been concerned with profitability, and I think this mine is a perfect example of how we analyze an acquisition opportunity,” said Oliphant.
“To put things in perspective, in order to acquire Sutton, we had to increase our shares outstanding by about 4.5%, but the benefits our shareholders get are: more than a 10% increase in production; more than a 10% increase in earnings; and more than a 10% increase in cash flow. And that’s just on the basis of the reserves we see today — we think this property has tremendous potential going forward and will be a very important part of Barrick in the future.
“One of the criteria we apply to acquisitions is a welcoming political climate, and our experience in Tanzania has been nothing less than stellar,” continued Oliphant. “It’s a country that really wants foreign investment, and it sees the benefit of the export earnings that a project like this will give it. We met government officials before we closed this project, and it was one of the warmest and most exciting times I can ever imagine.”
On behalf of the Tanzanian government, the Tanzanian High Commissioner to Canada, Fadhil Mbaga, said in a statement that the government is “pleased that a company of Barrick Gold’s stature has decided to make a significant investment in our country. This further confirms both the geological potential in Tanzania as well as our ‘we-mean-business’ approach under the leadership of his Excellency President William Mkapa.”
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