Development of a second underground mine north of Carlin, announced this week by Barrick Gold Corp., was planned even when gold prices were depressed. Now that prices have climbed above $300 an ounce, the company is hoping for another record year.
"When we get the quality of mine that we have at this low cost, we're able to weather the storms of the market," Barrick vice president of communications Vince Borg said Friday.
The new Rodeo mine will produce 350,000 ounces of gold a year for eight years at a production cost of $160 an ounce, he predicted. The Rodeo mine will cost $125 million and production there will start in mid-2001.
Barrick is also building a new ore processing facility at its Nevada properties called a roaster, he said. That will be a $330 million dollar investment that will cut the production cost of gold by 10 percent.
Borg said rumors about the possible sell-off of substantial gold reserves by European central banks were partially to blame for the drop in gold prices, which bottomed out at $253 an ounce in July. But there were other factors, he said.
"There was some impact from the Asian meltdown, the financial crisis there, because the Far East is such a source of demand for jewelry," Borg said. "But their market has recovered quite dramatically.
"Gold demand is now up 3.7 percent and supply is flat. We think the demand is very positive, which is why we can go ahead with these types of investments with confidence."
He said Barrick's processor will mean a number of construction jobs in the Carlin area.
Barrick's Nevada property north of Carlin is called Gold Strike and the company has two mines already in operation there, the surface Betze-Post and the underground Meikle.
Barrick reported record performance for its worldwide operations in 1999, with a 10-percent earnings increase to $331 million and a 30 percent cash flow increase to $702 million. The company projects a 35 percent increase in annual production to 5 million ounces in 2003. The expected increase is attributable to three new mines - the Rodeo, the Pascua in Chile and Argentina and the Bulyanhulu in Tanzania.
Ore and waste from the Rodeo mine will be trucked through a new underground drift or tunnel to the existing Meikle mine for removal.
The hoisting system in the Meikle is being modified to increase its lifting capacity 40 percent to 7,000 tons per day.
The new roaster processor will be the second at the Gold Strike properties. It uses a dry grinding and extraction process to recover gold from high-carbonate types of ore. The existing processor is an autoclave system, a wet process more efficient with sulfide-type ores. Barrick will be able to direct its ores to the processes best suited to the mineral types for the highest recovery rates.
