Gold Mining News

Placer and Newmont to JV Turquoise Ridge

Vancouver-based Placer Dome Inc. has agreed to enter into a joint venture with Newmont Mining Corp. at Turquoise Ridge in Nevada. Placer Dome will own 75% of the joint venture and will be the operator.

Newmont will acquire a 25% equity position in the Turquoise Ridge and Getchell deposits. Under an ore sale agreement, Newmont will purchase up to 1,800 tonnes per day of joint venture ore at cost and process it at its nearby Twin Creeks mill. Placer Dome and Newmont will each contribute their pro-rata share of mine development funding requirements, including capital costs and environmental closure expenses related to future joint venture operations. The joint venture is limited to an area of influence surrounding the Turquoise Ridge shaft. Placer Dome retains 100% ownership of properties outside the area of influence.

Placer Dome will realize significant savings in the form of lower operating costs and improved recoveries, which are expected to reduce cash and total costs to approximately $190 and $230 per ounce, respectively, from the original estimates of $215 and $265 per ounce. The 2% net smelter return royalty Placer Dome currently pays Newmont will be eliminated.

For Placer Dome, the formation of the joint venture will also eliminate the $26 million in capital that would have been required to refurbish the existing mill on the Turquoise Ridge property. Additionally, Placer Dome’s expected life of mine capital investment in Turquoise Ridge will be reduced by over $40 million as Newmont contributes its pro-rata share of mine start-up capital, sustaining capital, and closure and reclamation expenses.

The mine is currently ramping up to its expected full production rate of 300,000 ounces per year by the end of 2004. The joint venture is expected to have an effective date of July 1, 2003, and is subject to the completion of formal documentation. Closing is anticipated by October 31, 2003.

Barrick reveals new organizational design

In an effort to streamline reporting at the corporate level and to increase accountability and responsibility at the regional level, Toronto-based Barrick Gold Corp. has announced plans for a new organizational design. This design has three core elements: consolidating life-of-mine accountability under the chief operating officer, establishing regional economic business units, and building a corporate centre that adds value to the global enterprise.

Under the first element, managers responsible for the development, operations and closure of mine will report directly to the COO, thereby streamlining communications and ensuring that decisions on development can be integrated with decisions on operations and closure.

By establishing business units in North America, South America and Australia/Africa, the company anticipates creation of a catalyst for cost management and expanding opportunities to exploit regional synergies.

The role of the corporate centre will be to set strategic direction and to provide human and financial resources to add value. One way in which this may be achieved is by sharing expertise and best practices to help each region become more successful. The design, which includes several changes to senior management, will be implemented January 1, 2004.