Barrick: Pascua-Lama will wait for gold prices to recover
CEO of the Canadian mining claims that the company has been forced to moderate their ambitions of expansion by the lower price of the metal.
Although Barrick claims to have “moved on” after the failed merger with Newmont Mining it believes that Nevada remains central to their plans.
Jamie Sokalsky (CEO) highlights the potential for Barrick to grow from their own discoveries of gold in the U.S., and says that even without a merger it will continue to seek ways to cooperate in Nevada with Newmont Mining.
Sokalsky also adds that the Canadian group has “learned some hard lessons” from recent setbacks as they try to build their huge gold mine Pascua-Lama in South America, and now will take a more gradual approach to growth. The shift in emphasis shows how mining companies have been forced to moderate their ambitions for the weak gold price.
Barrick and Newmont, the second largest gold producer, halted merger talks in April amid harsh words. Barricks believed that the merger would generate $ 1,000 million of annual synergies through the combination of the shares of both companies in Nevada, the center of gold mining in the USA. Some investors were dismayed by the idea that Barrick – which accumulated large debts during an expansion phase when the price of gold shot up last year – was getting ready for a “land grab” by combining with Newmont. The idea of merger was revealed months after Barrick had to issue new equity to reduce debt. Sokalsky, who led Barrick since 2012, denied that the merger disagree with the most prudent course of the company since the fall of the price of gold.
Sokalsky said that Barrick is doing a “radical change” in its approach to major projects after problems with Pascua-Lama, a gold project on the border between Chile and Argentina that has spread far over budget. The project was shelved until the gold price recovers.
“Someday this will be one of the best gold and silver mines in the world, but now we have some challenges to solve in the regulatory and legal side, and that will take time,” says Sokalsky. Smaller and “mounted” Projects now make more sense, he adds.
About Barrick’s Debt of U.S. $ 10,500 million, the CEO said it is “absolutely manageable”.
Source: Pulso
