Barrick inks option deals with Precipitate Gold and Golden Minerals

An aerial view of the milling facilities at the Pueblo Viejo gold mine. The mine is held 60% by Barrick Gold and 40% by Goldcorp. Credit: GoldcorpAn aerial view of the milling facilities at the Pueblo Viejo gold mine. The mine is held 60% by Barrick Gold and 40% by Goldcorp. Credit: Goldcorp

Barrick Gold (TSX: ABX; NYSE: GOLD) has inked two earn-in agreements in as many days on projects in the Dominican Republic and Argentina.

The gold major is earning a 70% stake in Precipitate Gold‘s (TSXV: PRG) Pueblo Grande project, adjacent to Barrick’s Pueblo Viejo mine in the Dominican Republic, and is earning a 70% stake in Golden Minerals (TSX: AUMN; NYSE-AM: AUMN) El Quevar project in Argentina’s Salta province.

Under the deal with Precipitate Gold, Barrick has committed to spend US$10 million on exploration, including 7,500 metres of drilling at Pueblo Grande, and a pre-feasibility study within six years. It has also taken a 12% stake in the junior for a $1.4 million investment in a private placement of 12.71 million common shares at 11¢ per share.

Precipitate’s Pueblo Grande project surrounds the Pueblo Viejo mine site on the west, north and east side, covering roughly 99 sq. km, about 50 km north of the capital city of Santo Domingo. Pueblo Viejo is a joint venture between Barrick (60%) and Newmont (TSX: NGT; NYSE: NEM) (40%), and produces gold, silver and copper. The mine began commercial production in 2013 and is one of the world’s largest gold assets.

Precipitate notes there are substantial underexplored lithocap alteration zones close to Pueblo Viejo’s open pits, and the company has delineated at least eight drill target zones.

In June 2019, the junior completed a geophysical magnetic 3D inversion study on the advanced argillic altered Loma Cuaba Lithocap Zone. The study identified five magnetic low anomalies (near surface and concealed at depth) that the company believes are likely associated with magnetite destruction alteration measuring up to 450 metres in diameter, at an estimated depth of 400 metres to the top of the anomaly. None of the geophysical anomalies have been drill tested.

Highlights from historic drilling in two zones included 23 metres grading 4.76 grams gold per tonne and 23 grams silver per tonne; 27 metres of 2.46 grams gold and 26.7 grams silver in the Lechoza zone, and 11 metres of 2.96 grams gold and 104.9 grams silver in the Tres Bocas zone.

Meanwhile, under Barrick’s first option deal signed this week with Golden Minerals, the gold major must spend US$10 million on exploration over eight years and deliver a prefeasibility study on the El Quevar silver project in northwestern Argentina, 300 km northwest of the city of Salta. As part of the agreement, Barrick will purchase US$1 million worth of Golden Minerals’ shares in a private placement at a price of US21¢ per share.

The project’s Yaxtche deposit contains 2.9 million indicated tonnes grading 482 grams silver per tonne for 45.3 million oz. contained silver and 0.3 million inferred tonnes grading 417 grams silver per tonne for 4.1 million oz. contained silver.

A preliminary economic assessment (PEA) completed in September 2018 outlined an underground mine with a six-year mine life producing 29 million oz. payable silver over the life of the mine at an average grade of 409 grams silver per tonne. Using a US$16.66 per oz. silver price, the PEA estimates an after-tax net present value of US$45 million at a 5% discount rate and a post-tax internal rate of return of 17%.

The early-stage study estimates pre-production capex of US$97 million, including a US$16 million contingency.

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