Conversion Reduces Costs, Supports Expansion Project, and Lowers
Greenhouse Gas Emissions Over Life of Mine
Barrick Gold Corporation (NYSE:ABX) (TSX:ABX) (Barrick or the
“Company”) today announced that Pueblo Viejo Dominicana Corporation
(“PVDC”), operator of the Pueblo Viejo mine, has signed a 10-year
natural gas supply contract with AES Andres DR, S.A. in the
Dominican Republic that will enable the conversion of the Quisqueya
I power generation facility from heavy fuel oil to natural gas.
PVDC is a joint venture between Barrick (60 percent) and Goldcorp
Inc. (40 percent).
Quisqueya I is owned and operated by PVDC and
supplies power to the Pueblo Viejo mine. Converting the facility
from heavy fuel oil to natural gas is expected to reduce the mine’s
average cost of sales1 and all-in sustaining costs2 by
approximately $54 per ounce over the life of the mine3, supported
in part by higher margins on the sale of excess power to the
national energy grid. Cost savings expected from the conversion of
the facility from heavy fuel oil to natural gas are reflected in
the Company’s most recent consolidated cost guidance for 2019 to
2022.
“Pueblo Viejo is already a core asset with
industry-leading margins and a strong track record of operational
excellence,” said Greg Walker, Senior Vice President, Operational
and Technical Excellence. “Converting the mine’s power plant to
natural gas is expected to reduce Pueblo Viejo’s cost structure and
drive incremental improvements in cash flow over the life of the
mine, driving additional long-term value for our owners, as well as
our government and community partners.”
In addition, the use of natural gas is expected
to reduce greenhouse gas emissions associated with Pueblo Viejo by
approximately 260,000 CO2 equivalent tonnes per year.
PVDC will invest roughly $7.5 million to convert
Quisqueya I to natural gas, an investment that significantly
exceeds Barrick’s 15 percent hurdle rate. AES will construct a new
gas pipeline to the facility, with commercial gas production
expected to begin in the second half of 2019.
Barrick is currently advancing
prefeasibility-level studies for a plant expansion at the Pueblo
Viejo mine that has the potential to significantly increase
throughput at the operation4. Conversion of the power plant to
natural gas is anticipated to further strengthen the economics of
the project.
PVDC was advised by the Houston office of Akin
Gump Strauss Hauer & Feld LLP.
About AESAES Corporation
(NYSE:AES) is a Fortune 200 global power company that provides
affordable, sustainable energy to 15 countries through a diverse
portfolio of distribution businesses as well as thermal and
renewable generation facilities.
INVESTOR CONTACTDeni
NicoskiSenior Vice PresidentInvestor RelationsTelephone:
+1 416 307-7474Email: dnicoski@barrick.com
MEDIA CONTACTAndy
Lloyd Senior Vice PresidentCommunicationsTelephone: +1 416
307-7414Email: alloyd@barrick.com
TECHNICAL INFORMATIONThe
scientific and technical information contained in this press
release has been reviewed and approved by Geoffrey Locke, P. Eng.,
Manager, Metallurgy of Barrick, who is a “Qualified Person” as
defined in National Instrument 43-101 – Standards of Disclosure for
Mineral Projects.
ENDNOTE 1Cost of sales related
to gold per ounce is calculated using cost of sales related to gold
on an attributable basis (removing the non-controlling interest of
40% Pueblo Viejo), divided by attributable gold ounces.
ENDNOTE 2“All-in sustaining
costs” per ounce is a non-GAAP financial performance measure.
“All-in sustaining costs” per ounce begins with “cash costs” per
ounce and adds further costs which reflect the additional costs of
operating a mine, primarily sustaining capital expenditures,
general & administrative costs, minesite exploration and
evaluation costs, and reclamation cost accretion and amortization.
Barrick believes that the use of “all-in sustaining costs” per
ounce will assist investors, analysts and other stakeholders in
understanding the costs associated with producing gold,
understanding the economics of gold mining, assessing our operating
performance and also our ability to generate free cash flow from
current operations and to generate free cash flow on an overall
Company basis. “All-in sustaining costs” per ounce is intended to
provide additional information only, and does not have any
standardized meaning under IFRS. Although a standardized definition
of all-in sustaining costs was published in 2013 by the World Gold
Council (a market development organization for the gold industry
comprised of and funded by 25 gold mining companies from around the
world, including Barrick), it is not a regulatory organization, and
other companies may calculate this measure differently. This
measure should not be considered in isolation or as a substitute
for measures prepared in accordance with IFRS. Further details on
this non-GAAP measure is provided in the MD&A accompanying
Barrick’s financial statements filed from time to time on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov.
ENDNOTE 3Compared to the
continued use of heavy fuel oil and based on an oil price
assumption of $70 per barrel and a natural gas price
assumption of $3.75/MMbtu.
ENDNOTE 4For additional detail
regarding Pueblo Viejo, see the Technical Report on the Pueblo
Viejo Mine, Sanchez Ramirez Province, Dominican Republic dated
March 19, 2018, and filed on SEDAR at www.sedar.com and EDGAR at
www.sec.gov on March 23, 2018.
CAUTIONARY STATEMENT ON FORWARD-LOOKING
INFORMATIONCertain information contained or incorporated
by reference in this press release, including any information as to
our strategy, projects, plans or future financial or operating
performance constitutes “forward-looking statements”. All
statements, other than statements of historical fact, are
forward-looking statements. The words “believe”, “expect”,
“target”, “plan”, “anticipate”, “objective”, “intend”, “project”,
“goal”, “continue”, “budget”, “estimate”, “potential”, “may”,
“will”, “can”, “could” and similar expressions identify
forward-looking statements. In particular, this press release
contains forward-looking statements including, without limitation,
with respect to: (i) the impact of converting the Quisqueya I power
generation facility from heavy fuel to natural gas on the cost of
sales per ounce, all-in sustaining costs per ounce and operating
costs at the Pueblo Viejo mine; (ii) the ability to sell excess
power generated from Quisqueya I to the national energy grid of the
Dominican Republic, and the impact of such sales on the per ounce
cost of sales and all-in sustaining costs at the Pueblo Viejo mine;
(iii) the timing for commencement of commercial gas production from
Quisqueya I; (iv) the potential for plant expansion to increase
average annual production at Pueblo Viejo to 800,000 ounces per
annum (100% basis) after 2022; and (v) the impact of the natural
gas conversion project on greenhouse gas emissions.
Forward-looking statements are necessarily based
upon a number of estimates and assumptions including material
estimates and assumptions related to the factors set forth below
that, while considered reasonable by the Company as at the date of
this press release in light of management’s experience and
perception of current conditions and expected developments, are
inherently subject to significant business, economic and
competitive uncertainties and contingencies. Known and unknown
factors could cause actual results to differ materially from those
projected in the forward-looking statements and undue reliance
should not be placed on such statements and information. Such
factors include, but are not limited to: fluctuations in the spot
and forward price of gold, natural gas, diesel fuel, electricity or
certain other commodities (such as silver and copper); the
speculative nature of mineral exploration and development; changes
in mineral production performance, exploitation and exploration
successes; diminishing quantities or grades of reserves; increased
costs, delays, suspensions and technical challenges associated with
the construction of capital projects; operating or technical
difficulties in connection with mining or development activities,
including geotechnical challenges and disruptions in the
maintenance or provision of required infrastructure and information
technology systems; failure to comply with environmental and health
and safety laws and regulations; timing of receipt of, or failure
to comply with, necessary permits and approvals; the impact of
global liquidity and credit availability on the timing of cash
flows and the values of assets and liabilities based on projected
future cash flows; adverse changes in our credit ratings; the
impact of inflation; fluctuations in the currency markets; changes
in U.S. dollar interest rates; changes in national and local
government legislation, taxation, controls or regulations and/or
changes in the administration of laws, policies and practices,
expropriation or nationalization of property and political or
economic developments in the Dominican Republic; lack of certainty
with respect to foreign legal systems, corruption and other factors
that are inconsistent with the rule of law; damage to the Company’s
reputation due to the actual or perceived occurrence of any number
of events, including negative publicity with respect to the
Company’s handling of environmental matters or dealings with
community groups, whether true or not; the possibility that future
exploration results will not be consistent with the Company’s
expectations; risks that exploration data may be incomplete and
considerable additional work may be required to complete further
evaluation, including but not limited to drilling, engineering and
socioeconomic studies and investment; risk of loss due to acts of
war, terrorism, sabotage and civil disturbances; litigation;
contests over title to properties, particularly title to
undeveloped properties, or over access to water, power and other
required infrastructure; risks associated with the fact that
certain of the initiatives described in this press release are
still in the early stages and may not materialize; risks associated
with working with partners in jointly controlled assets; employee
relations including loss of key employees; increased costs and
physical risks, including extreme weather events and resource
shortages, related to climate change; and availability and
increased costs associated with mining inputs and labor. In
addition, there are risks and hazards associated with the business
of mineral exploration, development and mining, including
environmental hazards, industrial accidents, unusual or unexpected
formations, pressures, cave-ins, flooding and gold bullion or gold
concentrate losses (and the risk of inadequate insurance, or
inability to obtain insurance, to cover these risks).
Many of these uncertainties and contingencies
can affect our actual results and could cause actual results to
differ materially from those expressed or implied in any
forward-looking statements made by, or on behalf of, us.
Readers are cautioned that forward-looking statements are not
guarantees of future performance. All of the forward-looking
statements made in this press release are qualified by these
cautionary statements. Specific reference is made to the most
recent Form 40-F/Annual Information Form on file with the SEC and
Canadian provincial securities regulatory authorities for a more
detailed discussion of some of the factors underlying
forward-looking statements and the risks that may affect Barrick’s
ability to achieve the expectations set forth in the
forward-looking statements contained in this press
release.
Barrick disclaims any intention or obligation to
update or revise any forward-looking statements whether as a result
of new information, future events or otherwise, except as required
by applicable law.
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