VANCOUVER, March 28 (Reuters) - Barrick Gold Corp and Goldcorp Inc, the world’s No. 1 and No. 3 gold miners by value, have agreed to team up to potentially develop gold projects in northern Chile, Goldcorp said on Tuesday, as the industry starts to put money into growth again.
In a move aimed at reducing development costs and risks, Goldcorp and Barrick will form a 50-50 joint venture to study building gold mines in Chile’s Maricunga belt, Goldcorp said. That includes the Cerro Casale project, which is one of the world’s biggest undeveloped gold deposits.
After five years of painful belt-tightening as the price of gold fell, the world’s biggest gold miners have started to loosen their purse strings to build mines and find new deposits to replenish falling production and reserves.
The transaction fits Goldcorp’s strategy of teaming up with other big miners to develop large deposits to share the cost and technical risk. Barrick and others suffered high-profile cost blowouts on mine developments during the last gold price boom. “The last thing the industry needs is another Sudbury, another Nevada, where you are building duplicate infrastructure on the same deposits,” Goldcorp Chief Executive David Garofalo said in an interview, speaking about two well-known mining districts.
In a complex series of transactions costing Goldcorp around $445 million upfront in cash and shares, the Vancouver-based miner has agreed to buy fellow Canadian miner Kinross Gold’s 25 percent stake in Cerro Casale and all of its Quebrada Seca exploration project for an initial $260 million in cash.
Simultaneously, Goldcorp also agreed to buy mine exploration and development company Exeter Resource Corp and its flagship Caspiche project for around $185 million in shares. The project is located 10 km (6 miles) north of Cerro Casale.
Goldcorp will also acquire a 25 percent stake in Cerro Casale from Barrick, reducing Barrick’s holding in the project from 75 percent to 50 percent. Goldcorp will pay for the stake by funding all initial expenditures on Cerro Casale and by contributing the Caspiche project into the joint venture.
Cerro Casale contains proven and probable reserves of 23.2 million ounces of gold and 58.7 million ounces of silver. It also contains 5.8 billion pounds of copper.
A February 2010 feasibility study on Cerro Casale by Kinross envisaged a large open pit mine with a 20-year life and a heap leach processing operation to be built for an initial capital cost of $4.18 billion.
Garofalo declined to give any capital cost estimate for mine construction, saying Goldcorp and Barrick still need to do several years of studies. The addition of Caspiche and other factors mean a total cost “re-think” is needed, he said.
A decision on whether to go ahead with mine construction is five to seven years away, Garofalo said.
Goldcorp in 2015 partnered with diversified miner Teck Resources to develop neighboring mines in Chile to cut costs on building roads and other infrastructure, and to reduce their environmental footprint. (Reporting by Nicole Mordant in Vancouver; Editing by Leslie Adler)