Barrick Gold's Lagunas Norte mine in Peru is nearing the end of its life cycle, and is on track to produce around 260,000 ounces of gold this year, a steep decline from last year.
Barrick Gold Corp. is in talks to sell its Lagunas Norte gold mine in Peru with a sale announcement possible before the end of the year.
Mark Hill, chief operating officer, Latin America and Australia Pacific, with Barrick, made the comments about Lagunas on Friday during a webcast alongside executives from Randgold Resources Ltd., which Barrick is in the process of acquiring.
Earlier this year, Barrick’s executive chairman, John Thornton, said the Toronto-based gold miner intended to sell assets that weren’t strategic or tier-one and included Lagunas as an example. He defined tier-one as a property that produces at least half a million ounces of gold a year, has a life of more than 10 years and is low cost.
Lagunas is nearing the end of its life cycle, and is on track to produce around 260,000 ounces of gold this year, a steep decline from last year, when it produced almost 390,000 ounces. In its most recent quarter, Barrick took a US$405-million writedown on Lagunas.
In an interview, Kerry Smith, analyst with Haywood Securities Inc., said Lagunas could sell for about US$240-million with possible interest from Chinese buyers. Since joining Barrick a few years ago, Thornton has built up the firm’s relationships with Chinese gold companies, some of which have emerged as buyers for Barrick’s non-core assets. In 2017, for example, Shandong Gold Group purchased a 50-per-cent stake in Barrick’s Veladero mine in Argentina in 2017 for US$960-million.
Executives also gave more details on Friday around the acquisition strategy for the company once the US$6-billion acquisition of Randgold closes.
During the webcast, Randgold executive Willem Jacobs, who is slated to take over responsibility for Barrick’s Africa and Middle Eastern portfolio, said a large copper acquisition in the Democratic Republic of the Congo (DRC) is a possibility.
“Exploiting an already substantial footprint and presence in the DRC to acquire a world class copper deposit is certainly an opportunity which we will pursue,” he said.
Unlike a lot of western miners, Randgold, which operates exclusively in Africa, is comfortable operating in geopolitical hotspots such as the DRC. One of its largest gold mines, Kibali, is located in the central African country.
Haywood’s Mr. Smith said one potential world-class copper acquisition for the company is Ivanhoe Mines Ltd.'s Kamoa-Kakula project in the DRC, one of the world’s largest undeveloped copper assets. Vancouver-based Ivanhoe was founded by well known mining financier Robert Friedland.
Earlier this year, the DRC government abruptly increased taxes on miners, which is putting pressure on margins for companies. Both Mr. Friedland and Randgold’s founder, Mark Bristow, the incoming CEO of Barrick, have been harsh critics of the new tax code.
Barrick, which for most of its history had solely been a gold miner, diversified into copper in 2011 through the US$7.3-billion acquisition of Equinox Minerals Ltd.