“We have closed down our west African offices in Ghana and Burkina Faso to concentrate purely on Tanzania,” says executive general manager: operations in Tanzania, Gareth Taylor, in an exclusive interview with Mining Review Africa. Quite apart from current expansion at its Bulyanhulu, North Mara and Tulawaka mines in Tanzania, the company is spending more than US$20 million (R150 million) this year on further exploration to extend mine life and increase resource definition on the three mine sites, as well as the new Buzwagi mine which is scheduled to commence production in 2009.
“Talking figures, we are spending some US$18 million (R126 million) on exploration around the mine sites alone — US$3 million (R21 million) at Tulawaka, US$6 million (R42 million) at North Mara, US$9 million (R63 million) at Bulyanhulu, and a smaller amount at Buzwagi, where the feasibility work is complete,” Taylor elaborates. “Our exploration company, Barrick Exploration Africa Limited (BEAL), is spending several million more on other exploration activities in Tanzania,” he adds. “So what you are seeing here is that while Barrick spent some US$22 million (R155 million) in Africa as a whole last year, in 2007 it is spending the same amount in Tanzania alone.”
Barrick has just done its mid-year reserve calculations in Tanzania. “We know that we are going to replace everything that we have mined this year, in fact we are very confident that we will put more back into the reserve in 2007,” he insists. “At the moment we are looking at a reserve of just under 19 million ounces across the four mines.”
PRODUCTION UP DESPITE RAINS
Turning to production, Taylor estimates that — despite virtually every single open pit operation in Tanzania being affected by rain — the level for 2007 will be in the vicinity of 830 000 ounces, which is still an increase over the 800 000 ounces produced in 2006.
“Next year we expect a reduction on the back of Tulawaka basically coming to an end. It is currently in its bonanza year and will probably do about 210 000 ounces in 2007, compared to 140 000 ounces in 2006,” Taylor estimates. “Next year it will drop to about 150 000 ounces, and that will hurt us because it is a nice, efficient, low-cost operation,” he explains.
“At the same time we do have plans in place to try and improve on that. We are hoping that our extensive exploration around Tulawaka will enable us to extend the life of mine by about a year, which will give us another 100 000 ounces or thereabouts,” he predicts. “But this is purely on expectation at this stage. We’ll finish the drilling in the next three to four months, and then we’ll be able to make a good call on that.”
“Then in 2009 Buzwagi comes into play,” Taylor points out. “What Buzwagi will do that year is bring us back up to current levels above 800 000 ounces, but we’ll really feel its full effect from 2010 onwards, when our overall annual production should run at about 950 000 ounces,” he says.
One of the most active and successful mining operations in East Africa this year, Barrick expects to produce at least 830 000 ounces of gold in the region in 2007, generating US$ 555 million (close to R4 billion in turnover for a profit of US$ 190 million (more than R1.3 billion).
REVENUE TO RISE 20%
“In 2006 our revenue was US$468 million (close to R3.4 billion). Our expected US$555 billion (almost R4 billion) turnover this year represents a US$87 million (R610 million) million) improvement of close to 20%,” says Taylor.
“Our expected profit of US$190 million (R1.3 billion),” for 2007 follows a loss of US$33 million (R230 million) in 2006 because of a large capital expenditure programme plus various operational issues relating to our takeover of North Mara,” Taylor explains.
Looking to the future, Taylor sees the situation for mining improving. “I think that what we are starting to see now is a real understanding from government that if it wants real benefit from the mining industry, it has to put a lot of effort into improving the infrastructure of the country,” he points out.
“And it seems to be happening,” he enthuses. “The government just awarded a concession to an Indian company to take over and run the railways, which is hugely positive. It is also busy strengthening the power backbone to feed into the mining areas in the north,” he adds.
“Transport and power are the two vital aspects of our mining operations in Tanzania, and the government seems to have clicked that it can get a lot more out of the mining industry through addressing those areas,” Taylor explains. “We have also done great work on all fronts – from government at the top down to the communities — to improve sentiments and attract more support. I believe that attitudes will continue to change — it’s going to get better,” he concludes.