Barrick focuses on organic growth over M&A

By Rujun Shen

SINGAPORE (BestGrowthStock) – Barrick Gold (ABX.TO: ), the world’s largest gold miner, said it is focusing on developing its existing assets for growth, rather than looking for merger and acquisition opportunities, a senior company official said on Tuesday.

Riding record high gold prices, Barrick last week reported a 75 percent jump in operating profit for the third quarter.

“We look at just about everything in the market, but what we are really focused on now is growing the company organically, with our projects and our existing assets,” said Jamie Sokalsky, Barrick’s chief financial officer, in an interview with Reuters.

“We have a production target of 9 million ounces within the next five years, and we feel that’s doable with our existing asset base.”

Barrick plans to bring online its Pueblo Viejo project in the Dominican Republic in the last quarter of 2011, but first production might be pushed back to the first quarter in 2012.

Its Pascua-Lama project on the border of Argentina and Chile, which is expected to launch production in the first quarter of 2013, will contribute 1.5 million ounces to the company’s production together with Pueblo Viejo, with costs less than $200 an ounce, Sakolsky said.

“Once those are completed and in production, we have a number of other projects that we haven’t yet approved for construction, but are our next stop as potential projects to build – Cerro Casale and Donlin Creek, Reko Diq,” he said.

“These are longer term projects that are part of what we feel as the deepest project pipeline in the industry.”

Barrick has a majority stake in Cerro Casale in Chile, considered one of the largest undeveloped gold-copper reserves in the world.

Spot gold has hit successive record highs in the past few months, peaking at $1,387.1 in mid-October, spurred by uncertainties about the global economy. It was trading at $1,357.84 by 1043 GMT.

“We could see some highs significantly above where we are now,” said Sokalsky.

He declined to give details, but said robust investment demand, central banks’ buying and return of jewelry demand together are expected to push consumption higher, while industry supply is likely to decline over the long term.

High prices have made lower-grade ore that would have been uneconomic to mine now feasible for production. Barrick is looking into turning the Turquois Ridge mine in Nevada, currently an underground mine with 5 million ounce of reserves, to an open-pit mine with 20 million ounces of reserves, he said.

Barrick has no plan to start hedging again, after closing its hedge book last year, expecting its new projects with lower cost and longer life, in addition to a geographically diverse portfolio, to help shield the company from any downside risk, Sokalsky also said.

Barrick has 25 mines in 10 countries around the world, he added.

(Editing by Sue Thomas)

Barrick focuses on organic growth over M&A