Goldstrike: Strong contributer to Barrick’s profile

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The Goldstrike mine contributes between 13% and 15% of Barrick Gold Corporations’s (ABX) total gold production. Goldstrike and Cortez combined contribute ~30% of Barrick’s total production and cost less than the company’s overall costs per unit. This makes them very important to Barrick’s production and cost profiles.

Goldstrike mine site

Location

Barrick’s Goldstrike property is located in Elko and Eureka counties in north central Nevada— North America’s richest gold producing area.

Many of Barrick’s peers, including Goldcorp Inc. (GG), Newmont Mining Corp (NEM) and Kinross Gold Corporation (KGC), also have significant operations here. Barrick as agreements in place with Newmont Mining Corp to access the property.

Goldstrike employs about 1,750 employees and 250 contractors.

Properties

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Goldstrike consists of an open-pit mine, underground mine, and processing facilities. The open-pit Betze-Post is a truck-and-shovel operation that uses large electric shovels. The underground mine includes two major orebodies—Meikle and Rodeo. The Meikle orebody is a high-grade orebody, while Rodeo orebody is moderate-grade.

The processing facilities used to treat both open-pit and underground ore include an autoclave installation—for applying high pressure and temperature to the ore—and the roaster. The combined capacity of these facilities is approximately 33,000 to 35,000 tons per day.

To learn more about processing, read Market Realist’s, Investing in gold: A must-read value chain analysis.

Reserves and production

Based on existing reserves and production capacity, Goldstrike’s expected underground mine-life is 11 years. Open-pit mining should last 13 years, and processing operations, 15 years.

In 2013, Goldstrike produced ~0.9 Moz of gold at AISC of $901 per ounce compared to 1.2 Moz at $802 in 2012. Barrick expects 2014 production to range between 865 and 915 thousand ounces at a cost of between $920 and $950 per ounce. Slight increases in mine site sustaining capital have forced costs higher.

Note: The VanEck Vectors Gold Miners ETF (GDX)  invests in all the above-mentioned stocks while the SPDR Gold Trust ETF (GLD) provide exposure to the spot gold prices.

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