Barrick Gold Corporation (ABX) 60% owner and operator of the Pueblo Viejo gold project in the Dominican Republic announced that the project has sustained a major setback as heavy rains have damaged a tailing dam now under construction.
Barrick is apprehensive that the heavy downpour of roughly 217 millimeters of rain over a 48-hour period is likely to delay the start-up schedule for the gold mine. Production was originally slated for the first quarter of next year.
The tailing facility at the development project, still under construction, is currently under water and with the rainwater level constantly rising, this facility probably is the worst affected in the project area. Extra pumps have been installed and additional spillways cut to alleviate the water buildup.
The heavy rainfall is a historic high, and Pueblo Viejo mangers notified local and national authorities and alerted local communities about their concerns as water levels rose. No injuries have been reported, but the company has evacuated the majority of employees as a precautionary measure, according to director of communications and community affairs for Barrick Gold of North America.
A process is underway to assess the extent of damage to the tailings facility, the construction timeline and the pre-production capital budget of $3.3-$3.5 billion (100% basis).
The remaining 40% of the project is owned by Goldcorp Inc. (GG) which is one of the world's fastest growing senior gold producers. Its low-cost gold production is located in safe jurisdictions in the Americas and remains 100% unhedged.
Barrick's vision is to be the world's best gold company by finding, acquiring, developing and producing quality reserves in a safe, profitable and socially responsible manner. Recently, Barrick reported record results for the first quarter of 2011, driven by higher gold sales volumes and higher prices for both gold and copper. The first quarter reported a net income of $1.0 billion or $1.00 per share.
Adjusted net income was up 32% year over year to $1.0 billion or $1.01 per share compared with $763 million or $0.78 per share in the prior-year quarter, in line with the Zacks Consensus Estimate of $1.01.
In the first quarter of 2010, total revenue of $3.1 billion was higher than $2.6 billion in the prior-year quarter, below the Zacks Consensus Estimate of $3.2 billion. In the reported quarter, gold production was 1.96 million ounces at total cash cost of $437 per ounce or net cash cost of $308 per ounce ahead of budget, primarily due to strong performances from Cortez, Goldstrike and Veladeron.
Copper production was 75 million pounds at total cash cost of $1.25 per pound in first-quarter 2011.
Barrick faces stiff competition from AngloGold Ashanti Ltd. (AU) and Newmont Mining Corp. (NEM).
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