Barrick Releases Progress Reports on Four Projects

Published: February 16, 2017 |

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Barrick Gold Corporation has released progress reports on projects with the potential to contribute up to 1.1 million ounces of gold production at Cortez, Goldrush, Lagunas Norte, and Turquoise Ridge.

CORTEZ UNDERGROUND EXPANSION

Project Overview: Expand underground mining into Deep South area, below currently permitted levels

Status: On track

The Deep South project, located within the Lower Zone of the Cortez Hills underground mine, remains on track to contribute average underground production of more than 300,000 ounces per year between 2022 and 2026.

Development of the range front twin declines that will provide access to the lower zone of the mine began in the fourth quarter of 2016. For the first time, the mine is using a roadheader-a piece of machinery that employs mechanical cutting to facilitate continuous tunnel boring, rather than traditional drilling and blasting.

The prefeasibility study anticipated a cost of sales of $840 per ounce, and average all-in sustaining costs of $580 per ounce, for mining in the Deep South zone. Optimization work underway as part of the feasibility study has identified a number of opportunities to reduce these costs, including through the use of autonomous loading with a smart conveyance system, compared to a traditional conveyor system contemplated in the prefeasibility study.

Initial capital costs for the project remain unchanged, and are estimated to be $153 million. The expansion will enable the company to access approximately 1.9 million ounces of proven and probable reserves in the Deep South zone, of which more than 80 percent are oxide.

Permitting was initiated in 2016 with the submission of an amendment to the current mine plan of operations to the Bureau of Land Management. The permitting process is expected to take approximately three to four years, including the preparation of an environmental impact statement. A record of decision is expected in 2019 or 2020. On this basis, dewatering and development work could begin as early as 2019 or 2020, with initial production from Deep South commencing in 2022 or 2023.

Barrick expects to complete the feasibility study by the end of 2017, which will focus on processing, backfill, and stope sequencing to optimize free cash flow.

GOLDRUSH

Project Overview: Development of an underground mine at Goldrush

Status: On track

The Goldrush project continues to advance according to schedule, with the potential to become Barrick’s newest mine in Nevada by 2021.

Average annual production for the first full five years of operation is expected to be approximately 450,000 ounces of gold. Goldrush is expected to have a mine life of 21 years, with first production as early as 2021, and sustained production in 2023. The prefeasibility study anticipated a cost of sales of $800 per ounce, and average all-in sustaining costs of $620 per ounce; and Barrick has identified opportunities to further reduce operating costs. The company continues to anticipate initial capital costs of approximately $1 billion. Goldrush now has 9.6 million ounces of measured and indicated gold resources, and 1.9 million ounces of inferred gold resources.

During 2016, the company obtained the necessary permits for the construction of twin exploration declines. This will enable further drilling of the ore body in support of the feasibility study, including the conversion of measured and indicated resources to proven and probable reserves. The twin decline portal access site has been cleared, and work is expected to begin on the portal pad in the first quarter of 2017. They are also carrying out additional surface exploration drilling in the Red Hill zone, the shallowest portion of the Goldrush deposit. Permitting is expected to commence in 2018, initiating a three- to four-year environmental impact statement process. Underground development and production activities would commence following receipt of permits.

The Goldrush deposit remains open in a number of directions. In addition, the company continues to drill at the highly prospective Fourmile target, just north of the Goldrush discovery.

LAGUNAS NORTE LIFE EXTENSION PROJECT

Project Overview: Optimization of carbonaceous oxide ore recovery, and installation of refractory ore processing circuit

Status: On track

Barrick is now evaluating a sequenced approach to extending the life of the Lagunas Norte mine by first optimizing the recovery of carbonaceous oxide ore contained in existing stockpiles, followed by extraction and processing of refractory ores.

The prefeasibility study for the refractory ore project contemplated an initial capital investment of approximately $640 million for the installation of a 6,000 tonnes per day grinding-flotation-autoclave and carbon-in-leach processing circuit to treat refractory material. Once ramped up, the circuit has the potential to produce an average of 240,000 ounces of gold per year at a cost of sales of approximately $1,080 per ounce and all-in sustaining costs of $625 per ounce.

Over the past year, Lagunas Norte has developed a process to treat certain carbonaceous oxide material already stockpiled at the mine through heap leaching, helping to bridge the gap between processing of oxide and refractory materials. This has created an opportunity to first construct a grinding and carbon-in-leach processing circuit that would treat the remaining carbonaceous oxide material at the site. This would allow the company to defer the construction of the flotation and pressure oxidation circuits required for treating refractory ore, optimizing the timing of capital expenditures.

Engineering for the grinding and carbon-in-leach circuits is underway at a feasibility level, and will be available for investment committee review by the end of 2017. Pending a positive investment decision and receipt of permits, construction of these facilities could begin in late 2018, with first production in 2020.

Following this, and subject to environmental impact assessment approval, construction of the refractory ore processing facilities (flotation and pressure oxidation circuits) could begin as early as 2020, with first production in 2023.

TURQUOISE RIDGE UNDERGROUND EXPANSION

Project Overview: Expand underground mining through construction of an additional production shaft

Status: On track

Barrick continues to advance a phased approach to expansion at Barrick’s 75 percent owned Turquoise Ridge mine that maximizes free cash flow from the operation, while optimizing the timing of capital spending for expansion.

Through the development of a third shaft, the mine has the potential to increase output to an average of 500,000 ounces per year (100 percent basis) from existing reserves at a cost of sales of $750-$800 per ounce, and all-in sustaining costs of about $625-$675 per ounce. The project would require capital expenditures of approximately $300-$325 million (100 percent basis) for additional underground development and shaft construction.

The first phase of expansion has been focused on leveraging best-in-class initiatives to maximize productivity from the existing mine infrastructure, with strong results. Turquoise Ridge recorded its highest-ever level of production in 2016, producing 355,000 ounces of gold (100 percent basis), at a cost of sales applicable to gold of $593 per ounce, and all-in sustaining costs of $618 per ounce. Average throughput increased by 40 percent, from 1,500 tonnes per day in 2015, to 2,100 tonnes per day in 2016. Improvements in mining intensity and reliability have been driven by upgrades to underground ventilation systems, increasing top cut mining widths, greater equipment standardization, and better maintenance. Additional best-in-class initiatives under evaluation include the introduction of continuous mining, increased automation, additional ventilation modifications, and alternative mining methods.

Based on the rapid pace of improvement at the mine, the company is evaluating whether to proceed directly to the construction of a third production shaft, instead of the installation of a new ventilation shaft, which was previously contemplated as the second phase of the mine expansion. All necessary permits for a third production shaft are already in place.

At the end of 2016, the Turquoise Ridge mine had four million ounces of gold in reserves (75 percent basis) at an average grade of 15.1 grams per tonne-the highest reserve grade in the company’s operating portfolio, and among the highest in the entire gold industry. The mine also has 3.0 million ounces of measured gold resources, and 6.5 million ounces of indicated gold resources (75 percent basis). The Turquoise Ridge deposit remains open to the northeast, with significant potential to add additional reserves and resources through drilling.

About Barrick
Barrick has mining operations in Argentina, Australia, Canada, Chile, Dominican Republic, Papua New Guinea, Peru, Saudi Arabia, the United States, and Zambia. More than 75 percent of their gold production comes from the Americas region. The company was founded in 1983 by Canadian entrepreneur and philanthropist Peter Munk, and is headquartered in Toronto, Canada.

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