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Gold/Mining/Energy : Barrick Gold (ABX)
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To: Enigma who wrote (1162)4/19/1999 10:32:00 AM
From: mineman  Read Replies (1) of 3558
 
As gold slips in priced below $280/oz Barrick's technical people will re-evaluate the Bulyanhulu project and have a hard time justifying spending $200 million to develop it to production.

The .3 ounce underground vein will have high dilution because of the undulating shear structures enclosed by the similar-acting dark siltstone wallrock which will reduce the millhead grade to below .3 oz/t. The ore will need to be ground to -500 mesh to release the gold which will add considerably to the power and steel costs, and the shipping costs for the copper-gold concentrate will be very high.

This purchase will go down in history alongside the Placer-Dome Mt. Milligan blunder showing how slick smooth-talking promoters can persuade non-technical executives for even the largest companies to purchase marginal to uneconomic properties before the company's technical people have been able to sufficiently review the data.

Barrick could have used $200 million of the $520 they spent to buy the good grade, large, open-pittable Argenina Gold project and used the other $320 to develop it, but instead bought this low-grade, high-cost erratic vein in remote Africa.

A clue showing the real reason this deal was negotiated may be found in how Barrick's executives made the almost-unheard-of decision to not include a 'due-diligence' clause in the agreement!
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