Donlin a valuable key asset for Barrick
CEO Bristow candid about future of 39-million-oz gold project North of 60 Mining News – August 12, 2020
Last updated 9/26/2020 at 3:15pm
Barrick Gold Corp. President and CEO Mark Bristow believes Donlin Gold is "a very valuable asset" that is both blessed and challenged by its location.
"If you look at Donlin compared to some of the other assets in our portfolio, it's a pure gold play, it's in a mining-friendly jurisdiction, it's just in a very challenging geographical setting," he said during Barrick Gold's second quarter webinar on Aug. 10.
Barrick and its executive office have recently been more candid about Donlin Gold and the work being carried out there, including a press release last week detailing results from the 2020 optimization drill program at the 39-million-ounce gold mine project.
Previous updates on the project were provided almost entirely by Barrick's equal partner in Donlin Gold, Novagold Resources Inc.
Bristow pointed out that this update was released by Donlin Gold LLC, a joint venture owned equally by Barrick and Novagold, and said the partners should focus on the world-class gold mine project "as a stand-alone business."
"We happen to be shareholders of it," the Barrick boss added.
While there were questions as to whether Barrick would shed Donlin Gold as part of its plans to sell non-core assets following the merger with Randgold Resources Ltd., the mega-gold-miner that emerged has since become even closer involved in the enormous Alaska asset.
"With the changes in Barrick, we got much more involved," Bristow said.
The Barrick CEO sees three areas of risk for Donlin – construction risk, due to the asset's remote location; capital risk, because of the likely multi-billion-dollar price tag to develop a world-class mine off the grid in Southwest Alaska; and geology risk.
While Barrick and Novagold can not do much about the location, they can gain a better understanding of the geology. This is why the partners have deployed their top geologists to the project and are investing in a 22,000-meter drill program at the project this year.
"Once we have a clear definition of the reserves and, more importantly, the shapes of the ore bodies, we can then set with confidence the mining plan and, more importantly, the rate at which we can mine," Bristow said.
This data will allow the partners to narrow down how much gold per year they can expect out of a geologically optimized mine at Donlin, which can be used to calculate the economics of the operation.
This does not mean Bristow needs further evidence of Donlin's worth.
"At these gold prices, it's a very valuable asset," he said.
The positive results from the first nine holes this year, however, indicate that this year's drill program will likely add value.
Highlighted intercepts from this first batch of results include:
• 41.9 meters averaging 11.61 grams per metric ton gold from a depth of 30.4 meters in hole DC20-1871.
• 45.9 meters averaging 5.03 g/t gold from 35.4 meters in hole DC20-1866.
• 23.4 meters averaging 4.15 g/t gold from 108.3 meters in hole DC20-1866.
• 30.3 meters averaging 4.2 g/t gold from 226.5 meters in hole DC20-1866.
• 7.7 meters averaging 18.4 g/t gold from 60.9 meters in hole DC20-1873.
Bristow said Barrick is encouraged by grades, which are higher than have been modelled for Donlin.
"These early drill results have improved our understanding of the orebody, supporting the more recent geologic modeling," he said. "They also underscore Donlin Gold's significant potential as well as extraordinary optionality to the gold price over multiple cycles and in a mining friendly jurisdiction," said Bristow.
The geocentric Barrick CEO anticipates following up on the findings of the 2020 program with another round of drilling early next year.
"And then we'll take it from there," he said.
While Barrick is "obsessed about taking out the geology risk," it seems that the global gold miner is ready to elevate the world-class Donlin Gold deposit from a pipeline project to core development asset.
"It is definitely right now a key project for Barrick and very valuable today," Bristow informed analysts and shareholders.