Barrick Intends To Make Veladero Gold Mine A Tier One Asset

Barrick Gold Corporation (NYSE:GOLD) announced that after making a comprehensive review of the Argentina-based Veladero’s strategy and business plan, the gold mine’s life has been extended to at least 10 years.

The review comprised reinterpreting of the mine’s geology and an ongoing infill drilling campaign. The company aims to extend Veladero mine’s life beyond 2030 and also elevate it to a Tier One asset. Notably, Tier One mine is defined by the company as one that is capable of producing more than 500,000 ounces of gold per year with a mine life of minimum 10 years.

Per the company, the next step in Veladero mine’s transformation is to connect it with a cheaper and cleaner power source from the grid in neighboring Chile. This move, which is expected to be commissioned in the second half of 2020, will lower the mine’s carbon footprint by 50% and potentially reduce its cut-off grade. This is likely to create an opportunity to boost the mineable reserves of the mine.

Various projects associated with revitalizing Veladero — including leach pad expansion, have formed new employment opportunities and increased the number of local suppliers by three-fold.

Since 2005, the mine has contributed around $9.5 billion to the Argentinian economy in the form of royalties, taxes, salaries and payments to local suppliers. Barrick stated that the mine is expected to generate more than $88 million over the next decade for local infrastructure development.

Barrick’s shares have gained 26.1% in the past year compared with the industry’s 1% rise.

Barrick anticipates attributable gold production in the range of 4.8-5.2 million ounces at all-in sustaining costs of $920-$970 per ounce for 2020. Cost of sales is expected in the range of $980-$1,030 per ounce.

The company expects copper production of 440-500 million pounds at AISC of $2.20-$2.50 per pound and at cost of sales of $2.10-$2.40 per pound.

Zacks Rank & Other Key Picks

Barrick currently carries a Zacks Rank #2 (Buy).

Few other top-ranked stocks in the basic materials space are Newmont Corp. (NYSE:NEM) , Franco-Nevada Corp. (TSX:FNV) and Impala Platinum Holdings Ltd. (OTC:IMPUY) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Newmont has an expected earnings growth rate of 72% for 2020. The company’s shares have gained 23.4% in the past year.

Franco-Nevada has an expected earnings growth rate of 24.2% for 2020. Its shares have returned 28.5% in the past year.

Impala Platinum has an expected earnings growth rate of 424.1% for fiscal 2020. The company’s shares have inched up 1.3% in the past year.

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