TORONTO Barrick Gold (ABX.TO) sees lower cash costs at its Lumwana mine in Zambia in 2013 as mining at the copper project moves out of the lower grade material in the Malundwe pit and into the new Chimiwungo pit, Chief Executive Aaron Regent said on Monday.
"We've got to transition into Chimi, stabilize the mining operations at Chimi, and then we do anticipate seeing improved production and copper performance," said Regent, speaking at the Reuters Mining Summit in Toronto.
Barrick is the world's largest gold miner, but also operates two copper mines with a third one due to open this year.
Regent sees the operating costs at the copper mine beginning to move lower in 2013 as the company completes the transition to the new pit and ramps up that production.
Cash costs at Lumwana are expected to be around $2.40 to $2.75 per pound this year, compared with $1.45 to $1.75 per pound at the company's Zaldivar mine in Chile.
Barrick acquired Lumwana, which is set to produce some 230 million to 260 million pounds of copper this year, through its $7.7 billion takeover of Equinox Minerals in 2011.
"The key thing for Lumwana is really the new pit work," said Regent. "That's where we saw the real value in that deposit. It is a massive copper deposit which continues to grow."
In 2011, Barrick increased the size of the total resource at Lumwana to some 18 billion pounds of copper.
Costs will be higher this year as the company mines out the lower-grade material in the current pit and transitions into the Chimiwungo pit. Barrick expects to start mining Chimiwungo in the second half of 2012.
"It is a huge copper deposit and one that we'll be mining for generations," said Regent.
INDIA GOLD TAX
On the precious metal front, the world's top gold producer said the impact of higher customs duties on gold and platinum imports into India, a top global consumer of the precious metal, is yet to be determined.
Earlier this month, India for the second time in 2012 doubled import tax on gold bars to 4 percent on value. The government also intends to charge 2 percent on jewelry purchases more than 200,000 rupees ($3,900).
"For India, gold plays such a prominent part in society that notwithstanding I have to believe that gold will continue to be very much sought after," said Regent. "In fact, this has probably reinforced that."
Many Indian families buy gold as an investment in a climate of high inflation and crimped real interest rates. Gold is also an integral and important part of weddings, often representing the wealth of a bride and acting as her security.
India imported a record 1068.1 tons of gold in 2011, up slightly from 2010. Gold imports have been blamed for the country's widening current account deficit.
"If you are a holder of existing gold, the gold you own domestically has just gone up that much more in price," said Regent. "I think there probably will be a near term reaction, then the market will absorb, adjust and move on from there."
(Reporting by Julie Gordon; Editing by Marguerita Choy and Bob Burgdorfer)