The Pueblo Viejo mine is an open-pit mining operation located in the central part of the Dominican Republic in the Caribbean. It is operated by the Pueblo Viejo Dominicana Corporation, or PVDC, a joint venture between Barrick Gold Corporation (ABX), 60%, and Goldcorp Inc. (GG), 40%.
Pueblo Viejo began commercial production in January 2013. Barrick’s share of its proven and probable gold reserves is 9.7 Moz (million ounces). The mine’s expected life is 25 years and beyond.
Why is Pueblo Viejo important?
Pueblo Viejo was built at a cost of $3.7 billion. Once operational in 2013, it produced 488 thousand ounces of gold at AISC (or all-in sustaining costs) of $735 per ounce. It’s an important asset for Barrick, especially at a time when its best mine—Cortez—is struggling with short-term production growth issues. Plus, Barrick has divested itself of many other mines, which impacts its production profile. So, Pueblo Viejo’s full production ramp-up will help offset these production declines.
Higher production expectation
Barrick expects its equity share of 2014 gold production to range between 600 and 700 thousand ounces of gold at AISC in the high-end of the range of $510 to $610 per ounce. Greater plant availability and the completion of plant de-bottlenecking modifications should drive higher production. Ramping up to full production capacity will also decrease the cost per unit, which explains why cost estimates for 2014 are lower than 2013 costs.
Barrick’s peers, including Newmont Mining Corp (NEM), Kinross Gold Corporation (KGC), and Yamana Gold Inc. (AUY), are also facing production decline issues. As such, new mines are needed to offset this decline.