Cortez Hills Deep South To Expand Mining In Lower Zone

TORONTO, ON - Barrick Gold Corporation reported that the Cortez Hills Deep South Underground Project, Nevada is expected to contribute average underground production of more than 300,000 ounces per year. The project remains on schedule and within budget, with initial capital costs estimated to be $153 million. The Deep South project will utilize infrastructure which has already been approved under current plans to expand mining in the Lower Zone. This includes construction of new twin declines, a conveyor haulage system, fuel and lubrication system, shotcrete and cemented rock fill plants, and an underground maintenance shop.

At the end of the third quarter, the twin declines had advanced a total of 6,581 feet, or 44 percent of the total distance, in line with schedule. Mass excavations for key underground infrastructure have also begun, and contracts for underground construction works have been awarded. Activities in the fourth quarter will include mobilizing contractors, advancing the twin declines, and completing temporary warehouses, in addition to continued procurement for construction activities.

Permitting for Deep South was initiated in 2016 with the submission of an amendment to the current Mine Plan of Operations to the Bureau of Land Management. Permitting is expected to take approximately three to four years, including the preparation of an Environmental Impact Statement. A record of decision is expected by 2020. On this basis, initial production from Deep South could commence by 2023.

The Goldrush Project in the Cortez District has the potential to become the company’s newest underground operation in Nevada, with first production expected as early as 2021, and sustained production by 2023. The mine is expected to produce approximately 450,000 ounces of gold per year during its first full five years in operation. The first phase of the project involves the construction of an exploration twin decline to provide access to the orebody at depth, which will enable further exploration drilling, as well as the conversion of existing resources to reserves. The exploration declines can be converted into full production declines in the future.

Initial site preparation works for the portal have been completed, and construction on the portal pad is now under way. Barrick has also completed a surface drilling program in the Red Hill zone of the deposit, which is expected to support additional resource conversion.

Work during the fourth quarter will focus on advancing portal pad construction, and the selection of an underground contractor for decline development, which is expected to begin in early 2018. Permitting is expected to commence in 2018, initiating a three- to four-year Environmental Impact Statement process.

At the Turquoise Ridge Third Shaft Project, Nevada the development of a third shaft, combined with improvements in mining productivity, Turquoise Ridge has the potential to increase output to an average of 500,000 ounces per year (100 percent basis). The project is expected to require additional underground development and shaft construction. All necessary permits for a third shaft are already in place.

Surface preparation works began in the third quarter, and included moving 95,000 cubic yards of earth, setting up storm water diversion infrastructure, and extending utilities to the shaft site. This work is expected to be complete by the end of 2017. Contracts and materials to support medium and high voltage electrical distribution, water handling and sewage treatment have been purchased, and a tender process is now open for the shaft sinking contract.

In keeping with the phased approach, construction on a ventilation shaft could begin in the second half of 2018, at roughly half the total capital expenditure of a full production shaft. This ventilation shaft would allow for expanded underground mining using existing infrastructure, and could be equipped and converted to a full production shaft to increase the mine's output to approximately 500,000 ounces per year.

During the quarter, Turquoise Ridge also took delivery of its first road header. Building on the successful use of this technology at Cortez, the road header will enable the mine to transition to mechanical cutting, rather than traditional drilling and blasting, improving overall productivity and throughput at the operation, and supporting the increased hoisting capacity that a third shaft will support.

Barrick reported that in the third quarter, lower revenues, earnings, and cash flow for the quarter reflect lower gold production compared to the prior-year period. Despite these factors, a stronger balance sheet and robust cash flow generation allowed us to increase investments in the future of our business, with the ultimate objective of growing free cash flow per share over the long term.

The company allocated more capital to our pipeline of low risk, organic projects, located at or near Barrick's core operations. These projects have the potential to contribute more than one million ounces of annual production to Barrick, beginning in 2020. In addition to organic growth and exploration, the impact of our ongoing investments in digital transformation and innovation, including improvements in safety, productivity, efficiency, and transparency, are expected to accelerate as we broaden the implementation of these projects across operations.

KELVIN DUSHNISKY, President, said, “Achieving and maintaining a strong balance sheet remains a top priority. So far this year, we have reduced our total debt by nearly $1.5 billion, exceeding our target of $1.45 billion for 2017. During the third quarter, we completed the redemption of approximately $731 million of May 2023 notes, and fully repaid the amounts outstanding on our Pueblo Viejo project financing agreement. Our goal is to reduce our total debt to $5 billion by the end of 2018, using cash flow from operations, and through further portfolio optimization, including potential divestments and the creation of new joint ventures and partnerships. The Company will continue to pursue debt reduction with discipline, taking only those actions that make sense for the business, on terms we consider favorable to our shareholders.

Barrick produced 1.243 million ounces of gold in the third quarter. This compares to 1.381 million ounces, in the prior-year period. Production levels were expected to be lower in the third quarter, with higher gold production and lower costs expected in the fourth quarter. We have narrowed our full-year gold production and cost guidance ranges. We expect full-year gold production to be 5.3-5.5 million ounces, at a cost of sales3 of $790-$810 per ounce, and all-in sustaining costs4 of $740-$770 per ounce. This compares to our most recent production guidance of 5.3-5.6 million ounces, at a cost of sales3 of $780-$820 per ounce, and all-in sustaining costs4 of $720-$770 per ounce.

The Company produced 115 million pounds of copper in the third quarter, at a cost of sales3 of $1.67 per pound, and all-in sustaining costs7 of $2.24 per pound. This compares to 100 million pounds, at a cost of sales3 of $1.43 per pound, and all-in sustaining costs7 of $2.02 per pound, in the third quarter of 2016. Our full-year copper production guidance range has narrowed to 420-440 million pounds. We have increased our copper cost of sales3 guidance to $1.70-$1.85 per pound, primarily as a result of higher costs in Zambia. Our copper all-in sustaining cost guidance range has narrowed to $2.20-$2.40 per pound.”

The company aims to cultivate a high-performance culture defined by the following principles: a deep commitment to partnership, consistent execution, operational excellence, disciplined capital allocation, and continual self-improvement. Barrick is obsessed with talent, and seek out fresh perspectives from other industries, challenging ourselves to think differently as it transforms the company into a leading 21st century company.