This is the clear message from Barrick Africa regional vice-president Gareth Taylor in an interview with Mining Review Africa. “Barrick is certainly here for the long run, and once our operations in Tanzania are fully optimised we will look to neighbouring countries to maintain or increase output from the African region.
“The increased gold price is leading to greater reserves, and therefore extensions to the life of most of our projects, but this is countered by the increased cost of doing business, based largely on increased fuel, steel and reagent prices, as well as the cost of labour,” Taylor says.
With its shares traded on the Toronto, New York, London, Euronext – Paris and Swiss stock exchanges, the company also has the largest reserves in the industry, with 124.6 million ounces of proven and probable gold reserves, 6.2 billion pounds of copper reserves, and 1.03 billion ounces of contained silver within gold reserves, as at December 31, 2007.
In 2007, Barrick produced an overall 8.06 million ounces of gold at a cash cost of US$350/oz. It also produced 402 million pounds of copper at a total cash cost of US$0.83/lb.
As far as 2008 is concerned, the company is targeting gold production at between 7.6 and 8.1 million ounces and copper production at 380 to 400 million pounds. Total cash costs are expected to be between US$390 and $415/oz for gold and US$1.15 to 1.25/lb of copper. In Tanzania, gold production in 2008 will be in line with 2007 at between 620,000 and 640,000 ounces.
Tanzania Expected to Honour Agreements
Referring to future relations between the Tanzanian government and the country’s mining industry, Taylor expresses the belief that the fiscal stability agreements in existence would be honoured by the government. “The recent report from the Bomani Commission called for changes to agreements, and these changes would be part of the negotiating process for any new projects in the future,” he explains.
As far as exploration is concerned, Barrick has been spending about US$20 million (R160 million) a year on exploration in Tanzania in recent years. “Expenditure this year has been focussed on conversion of resources defined in 2007 to reserves,” Taylor says. “Once again, expenditure will be in the region of US$20 million.
” As regards profits, he says that in 2008 Barrick had a very high capital expenditure profile in Africa, and would thus be cash-negative until the company’s new Buzwagi project was complete and in full production.
“The project was approved for construction almost a year ago, and remains on schedule and within budget. The project is fully committed.”
Taylor says that detailed design and bulk earthworks were complete, and all equipment had been ordered. By about mid-July, “Concrete placements were at 85% (16,000 m3 of 18,000 m3 had been poured); field-erected tanks were 90% complete; and water management earthworks were at 50%.
“The first gold pour will proceed on schedule in the second quarter of 2009,” Taylor predicts. “Buzwagi is expected to produce 250,000 to 260,000 ounces a year in the first five years, and to average 250,000 ounces a year over its life of mine, which is 15 years. It has a proven and probable reserve of 3.4 million ounces of gold at a grade of 1.7 g/t gold and 0.12% copper.”
Taylor reiterates that capital expenditure for the project was estimated at US$400 million (R3.2 billion) and that operating expenditure would be in the region of US$275/oz.
Other Barrick Mines Doing Well
Turning to Barrick’s other operating mines in Tanzania, a wall failure associated with extreme rainfall in the Gokona pit at North Mara in 2007 prevented the mine from accessing higher grade ore and improving mining volumes.
Taylor reveals that new equipment had been purchased and mining volumes are expected to improve through 2008. “North Mara will produce 240,000 oz in 2008. The higher gold price has resulted in an increase in reserves, and at all three open pits the total ore to be mined over the life of the mine (LOM) has increased.
“An exciting prospect is the study which is underway for an underground operation at Gokona,” Taylor says.
Measured and indicated resources at the end of 2007 were 4.29 million ounces, and the current LOM plan shows North Mara operating until 2017. “The current reserve statement for 2008 is expected to show an extension of LOM past 2017."
The North Mara gold mine is located in the Tarime district of the Mara region in north-western Tanzania, approximately 100 km east of Lake Victoria and 20 km south of the Kenyan border.
At Tulawaka gold mine ore processed in 2007 amounted to 434,000 tonnes at 13.7 g/t, yielding 178,600 oz of gold. “Ore processed this year is planned at 411,000 tonnes at 16.1 g/t grade for 202,000 oz of gold,” Taylor says. “Moving onwards to 2009, production will only come from underground ore and existing open pit stockpiles. That means production will drop to approximately 100,000 oz prior to closure of the open pit mine in 2010.”
Underground Mining Underway at Tulawaka
Underground ore production commenced earlier this year, although it still had to reach full production. Currently this was not impacting on the site’s gold production rates, but Taylor emphasises that with open pit mining activities about to conclude, underground production would be essential to extend the existing mine life.
Latest production statistics (till June 2008) show 181,586 tonnes processed at a grade of 23.14 g/t for 129,000 ounces of gold. Taylor says that underground production will ramp up to full production by the end of 2008. Overall cost of the underground project, including both operating at capital components, will be of the order of US$30 million (R240 million).
Production at the Bulyanhulu gold mine, which is located about 55 km south of Lake Victoria and approximately 150 km from the city of Mwanza, will be at the same level this year as 2007. “It is steadily increasing, and over the coming months is expected to be in line with previous expectations. It will be 240,000 oz this year, rising to 320,000 oz in 2009.
“There are no plans to expand operations at Bulyanhulu,” Taylor adds. “The focus is on increasing the capacity of the mine to produce maximum ounces safely."
Asked whether Barrick was considering or planning any other specific new projects in Tanzania at this stage, Taylor’s response is: “We are a 50% shareholder in Kabanga Nickel which is currently undergoing a feasibility study.”