TORONTO (CP) -- Barrick Gold Corp. [NYSE:ABX; TSX:ABX] has discovered a new ore body at its Pueblo Viejo mine at Monte Oculto between two open pits at the 30-year old project in Dominican Republic.
However, the company is not going to alter its mining schedule or plans as a result of the discovery, as it wants to keep to its timelines to take advantage of current high gold prices, said CEO Greg Wilkins.
''We're going to keep the scope of the project as is for now,'' said Wilkins.
''We're going to consider that it has potential for phased expansion in the future. We're not going to stop and redefine it now,'' Wilkins said, adding it could turn into a ''trap'' with additional delays.
About C$20 million was spent in the second quarter on the Pueblo Viejo project to advance the project design and engineering, exploration, community development programs and evaluation of electric power sources.
On Wednesday, Barrick reported lower profits in the second quarter as the world's biggest gold producer took a charge after it eliminated its gold hedging contracts so it can cash in on higher spot prices.
The company says government delays on its massive proposed Pascua-Lama gold project is eating into its construction schedule and it won't commit to construction contracts until it gets final government signatures.
The project, estimated at about US$2.4 billion, is located on Chile-Argentina border and has been awaiting a number of final formal approvals.
Environmental impact approvals in principle have been obtained, but not all paperwork is complete for the bilateral project. There are also many outstanding issues including tax, immigration and customs.
''The inertia with respect to signing it is really the same dialogue we've had all year. It's a matter of getting governments to sit down and sign documents,'' Wilkins told analysts.
''We're not going to find ourselves pregnant with major expenditures until all the signatures are on pieces of paper.''
Signing construction contracts would put the company in an untenable negotiating positions with governments, Wilkins said.
''We've tried to be very clear about that with our investors. If we can't get that signed, we'll be eating into our construction schedule which will have an impact on the project.
However, the company remains hopeful since so much progress has been made to date.
Barrick says Pascua-Lama will create 5,500 jobs directly during its construction stage and 1,660 jobs over its estimated 20 years of operations.
Pascua-Lama project is just one of dozens of projects owned by Barrick, which became the world's largest gold producer following its friendly takeover of Placer Dome.
But the merger of the two companies has also taught Barrick some lessons in the art of acquisitions, Wilkins said Thursday, and the company will very selective with its future takeover targets.
Barrick is flush with investment capital, but it is seeking low-cost, long-life assets that fit in with its current geopolitical risk profile, its CEO said.
''There aren't a lot of great opportunities in a great price range at this point in time,'' Wilkins said.
In the future, the company will use more cash than equity in making deals, he said.
Shares in Barrick were up 46 cents to C$35.03 on the TSX near midday Thursday.
for RI's analysis on Barrick's second quarter results.
(c) The Canadian Press 2007
