March 16, 2017 / 6:01 PM / 2 years ago

Exclusive: Barrick Gold explores sale, joint venture for Peru mine - sources

TORONTO (Reuters) - Barrick Gold Corp, the world’s biggest gold producer, is exploring options for its Lagunas Norte mine in Peru, including the sale of part or all of the asset, three people with knowledge of the matter told Reuters.

Barrick, which is working with Toronto Dominion Bank, may prefer to hold 50 percent of Lagunas Norte, but it was unclear if the company wanted to keep control of the open-pit mine as operator, the people added.

The mine could be worth about $1.4 billion, according to industry experts, based on about two times the net asset value ascribed to high-quality gold mines. A Credit Suisse analyst put the mine’s NAV at $711 million.

Barrick and TD both declined to comment on Thursday.

Mining companies in South America, global miners and private equity firms have reviewed the asset, said the sources, who were not authorized to speak publicly on the matter.

One of the sources characterized the effort as a “soft process” that was not a top priority for Barrick.

Lagunas Norte is one of Barrick’s five core mines, operating more than 4,000 meters above sea level in the Andes Mountains, with 4.2 million ounces of proven and probable gold reserves at the end of 2016.

Barrick President Kelvin Dushnisky told Reuters last October that more partnership deals could be expected from the company as they allow miners to combine capital, technical expertise and other abilities.

Lagunas Norte, which is nearing the end of its life under the current mine plan, has produced more than 9 million ounces of gold since March 2005.

Barrick is considering a phased project to extend the mine’s life, the Toronto-based company said on Feb. 22. That approach could improve the economics of a $640 million development that seeks to add about nine years and some 2.2 million ounces of gold production to the operation.

The mine is expected to produce 380,000 to 420,000 ounces of gold in 2017, down from 435,000 ounces in 2016, with production costs of $560-$620 an ounce, up from $529 last year.

Under an expansion plan, Barrick will first decide whether to build facilities for a process it developed to extract gold from material previously stockpiled as waste. Production could start in 2020 and run to 2024.

A second phase would require additional facilities to process technically challenging refractory ore that lies below the existing ore deposit, due to run out in 2018. That production could start in 2023 and extend to 2029.

Reporting by Susan Taylor and John Tilak; Editing by Denny Thomas and Bernadette Baum

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