Tuesday, May 31, 2011

Barrick's (ABX) Pueblo Viejo Project to be Delayed

After heavy rainfalls early last week, Barrick Gold's (NYSE:ABX) Pueblo Viejo project in the Dominican Republic will probably not start during its planned launch in the first quarter of 2012.

The tailings facility at Pueblo Viejo has damaged from the large build-up of rainwater, which the giant miner is now working on. The facility hasn't been fully constructed yet and work still must be done to bring to its full capacity.

A damage assessment is ongoing concerning what the depth the effect will be on the launch timeline as well as the budget originally set aside for preproduction costs.

Costs for the project are already weighing on Barrick, as well as partner in the project, Goldcorp (NYSE:GG), which have had cost estimated boosted to a range of $3.3 billion to $3.5 billion in 2011 so far. This will assuredly add to the mounting costs.

An estimated 1.04 million to 1.13 million ounces of gold are expected to be produced at Pueblo Viejo during the first five years of operation. Cash costs per ounce are projected to be from $250 an ounce to $275 an ounce.

Barrick Gold has a 60 percent stake in the project while Goldcorp has the remaining 40 percent.

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