Stock performance keeps Barrick a front-runner

Staying ahead of the pack in a bear market isn’t an easy task, but Toronto-based gold producer American Barrick Resources (TSE) has been remarkably good at it. “Our stock performance has been better than the norm in recent months,” said Robert Smith, president of American Barrick, in an interview.

Despite the overall recessionary climate, American Barrick has managed to keep its spot as the top performing North American gold stock for two years in a row. The company’s shares have recently traded as high as $24.63 compared with $19.25 at this same time a year ago. 0311,0202,0304,0201, Barrick top performer Close 52-week % above Company 31/12/90 range low American

Barrick $25.00 $28.25-17.88 40% Pegasus Gold $14.80 $18.00-10.88 36% LAC Minerals $10.00 $16.00-7.38 35% Hemlo Gold $11.25 $20.38-9.00 25% Battle

Mountain $8.33 $21.63-6.38 23% Echo Bay $10.13 $24.88-8.25 23% Placer Dome $19.00 $25.00-15.50 22% Newmont

Mining $46.55 $62.93-38.37 21% Newmont Gold $47.70 $66.10-40.23 19% Homestake $21.41 $27.16-18.10 18% Corona $4.95 $11.50-4.65 6% Amax Gold $13.88 $23.50-13.88 0%

Barrick’s strategy, which combines state-of-the-art mining operations with a conservative financial approach and comprehensive gold hedging, has been remarkably successful.

And many gold analysts expect the company to continue its strong performance in the years ahead, thanks largely to its 100% owned Goldstrike mine in Nevada where an ambitious expansion plan is under way. Goldstrike’s deep sulphide reserves are the cornerstone of that operation’s future growth.

Situated along the famous Carlin Trend near Elko, Nev., the huge open pit mining and milling operation is set to become North America’s largest gold mine in 1992 when its output triples to 900,000 oz. Goldstrike reserves 0403,0004,0201,0004,0201,0004,0201 Tons Grade Total oz. (million) (oz./ton) (million) Proven &

Probable 169.9 0.108 18.0 Possible 9.6 0.039 0.4

Nearly 16 million oz. of Goldstrike’s contained gold is hosted by the deposit’s deep sulphide ore. The deep sulphide reserves (proven and probable) total nearly 92 million tons at a grade of 0.17 oz. gold per ton.

Mining analysts at Barclays de Zoete Wedd said American Barrick will continue to benefit from expansion at Goldstrike and at the same time reap the rewards of its hedge strategy which will see the company realize a minimum of US$420 per oz. of gold to the end of 1992. The primary risk is technical at the large Goldstrike open pit as the deeper levels of the orebody are brought on stream. But mining engineers at Barrick are confident they can meet any technical challenges the mine has to offer, including extensive dewatering required.

Although there were some minor problems with the temporary pit walls last year, they were not considered serious by the company. “We had some minor problems with the walls, but nothing that hurts us from a production point of view,” said John Lill, vice- president of U.S. operations.

According to analysts at Yorkton Continental Securities, American Barrick has one of the most professional management teams in North America. “It enjoys a premium rating and it is, in our opinion, a classic example of successful growth by acquisition,” said Yorkton. Barrick originally acquired the Goldstrike property back in 1987 for $43 million cash, and 4.2 million in shares worth nearly $38 million at the time.

Last year, the mine achieved its planned production target of 330,000 oz. by operating at a level of 315,000 tons per day, or nearly 115 million tons for the year. About 185,000 oz. came from milling and autoclave while another 145,000 oz. were produced by low-cost heap-leaching which provides an opportunity to treat the lower-grade ore.

Since most of Goldstrike’s ore lies below the water table, the pumping rate for pit dewatering could eventually rise as high as 30,000 gallons per minute in 1991. All water being discharged from the property is fit for drinking, and more than meets the State of Nevada requirements. A minor amount of treatment is required to bring the water quality up to those standards, the company said.

“Nevada is starting to catch up with other areas in environmental awareness,” noted Smith. “This is simply part of the larger worldwide environmental movement taking place at the moment,” he added. As a result, American Barrick is making special efforts to be environmentally sensitive, he said.

Meanwhile, the company’s environmental impact statement has been submitted to the Environmental Protection Agency for review, and a public review will follow, with a final clearance expected this year. While some analysts may view Barrick as a relatively high-cost producer at US$332 per oz., and with essentially one large mining operation to expand on, its rising gold output and flexible hedging strategy will undoubtedly provide a solid foundation for future growth.