Barrick to Spend $1.3 Billion on Pueblo Viejo's Expansion

Barrick Gold Corporation GOLD announced that the proposed expansion of the Pueblo Viejo gold mine will boost the mine life and also contribute to the economy of Dominican Republic till 2040 and beyond.

The project will require an initial investment of $1.3 billion for expansion of the process plant and the tailings facility. The investment will extend the mine’s life and unlock potential to increase exports by $22 billion. The company also stated that this is likely to generate more than $4 billion in taxes at a gold price of $1,500 per ounce.

Notably, Pueblo Viejo paid $1.8 billion in direct taxes between 2013 and 2016. Moreover, exports from the mine accounted for more than 38% of the country’s total exports in 2019. The expansion will also create more job opportunities. Currently, 97% of the company’s workforce at Pueblo Viejo is Dominican, of which 12% is female participation. Barrick will also promote the development of local economy-based contractors and suppliers for the mine.

Importantly, the Pueblo Viejo expansion will enable the mine to exploit the lower grades in the ore body. Also, the expansion is not aimed at processing ores from outside the current concession area.

The company noted that the conversion of the mine’s Quisqueya 1 power plant to natural gas was commissioned successfully. The move is likely to make a favorable impact on the environment by reducing greenhouse gases by 30% and nitrogen oxide by 85%.

Barrick’s shares have gained 40.7% in the past year compared with the industry’s 27.7% rally.

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 to be $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 top-ranked stocks in the basic materials space are Daqo New Energy Corp DQ, Newmont Corporation NEM and Impala Platinum Holdings Limited IMPUY, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Daqo New Energy has an expected earnings growth rate of 353.7% for fiscal 2020. The company’s shares have surged 68.4% in the past year.

Newmont has an expected earnings growth rate of 69.7% for 2020. Its shares have returned 33.3% in the past year.    

Impala Platinum has an expected earnings growth rate of 424.1% for fiscal 2020. The company’s shares have surged 82.8% in the past year.

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