Barrick Gold Corp. will partner with Saudi Arabian mining company, Ma’aden, to develop its Jabal Sayid copper project in Saudi Arabia.
Ma’aden will pay $210 million for 50 percent of the copper project that is projected to have a production capacity reach between 45 kt to 60 kt/a (50,000 to 66,000 stpy) or 100 million to 130 million lbs of copper at cash costs of $1.50-$.70/lbs. Based on 1.4 billion pounds of copper in proven and probable reserves as year-end 2013, the expected mine life is 15 years, “but may be increased by the joint venture in lights of its intention to expand exploration efforts under its exploration and mining licenses,” said Ma’aden in a statement..
The Globe and Mail reported that Barrick Gold Corp. is looking for help getting the project off the ground and that it belives Ma’aden’s experience in the region will do that.
Barrick will also look to replicate the process on other projects such as its mothballed Pascua Lama in the Andes.
The joint venture marks the first partnership the company has formed since John Thornton became Barrick’s executive chairman earlier this year.
Thornton has spoken to media about developing a long-lasting relationship with China, currently the world’s biggest gold producer and consumer.
“The concept of partnering with either governments or sources of capital or other mining companies to develop other assets will be a focus for us,” said Barrick spokesman Andy Lloyd.
Barrick acquired Jabal Sayid when it bought Equinox Minerals Ltd. in 2011 to gain control of the large Lumwana copper mine in Zambia.
Barrick has since written down the copper asset and raised funds to reduce the massive debt incurred with the Equinox acquisition.
Ma’aden will own half of the Saudi Arabian mine’s copper production. Lloyd said Barrick had no active plans to divest copper assets.
After a tough year where the company recorded $11.5 billion in writedowns and suspended its key Pascua Lama project amid cost overruns, Barrick has shifted its strategy on project development.
Instead of sinking billions of dollars to develop a large asset by itself, the Canadian miner said it would take a more measured approach to building a mine.
In addition to Pascua Lama, Barrick has shelved its other big projects: Cerro Casale in Chile and Donlin Gold in Alaska.
The Saudi Arabian deal is expected to close in the fourth quarter of this year.