Barrick to Convert Pueblo Viejo Power Plant to Natural Gas

Barrick Gold (TSX:ABX,NYSE:ABX) announces that the Pueblo Viejo Dominicana Corporation (PVDC), operator of the Pueblo Viejo mine, has signed a ten-year natural gas supply contract with AES (NYSE:AES) in the Dominican Republic that will enable the conversion of the Quisqueya I power generation facility from heavy fuel oil to natural gas. PVDC is a joint venture between Barrick (60 percent) and Canadian gold miner Goldcorp (TSX:G) (40 percent).

Quisqueya I is owned and operated by PVDC and supplies power to the Pueblo Viejo mine. Converting the facility from heavy fuel oil to natural gas is expected to reduce the mine’s average cost of sales and all-in sustaining costs by approximately US$54 per ounce over the life of the mine, supported in part by higher margins on the sale of excess power to the national energy grid.

As quoted in the press release:

“Pueblo Viejo is already a core asset with industry-leading margins and a strong track record of operational excellence,” said Greg Walker, senior vice president, operational and technical excellence at Barrick. “Converting the mine’s power plant to natural gas is expected to reduce Pueblo Viejo’s cost structure and drive incremental improvements in cash flow over the life of the mine, driving additional long-term value for our owners, as well as our government and community partners.”

In addition, the use of natural gas is expected to reduce greenhouse gas emissions associated with Pueblo Viejo by approximately 260,000 CO2 equivalent tonnes per year. PVDC will invest roughly US$7.5 million to convert Quisqueya I to natural gas, an investment that significantly exceeds Barrick’s 15 percent hurdle rate. AES will construct a new gas pipeline to the facility, with commercial gas production expected to begin in the second half of 2019.

Barrick is currently advancing prefeasibility-level studies for a plant expansion at the Pueblo Viejo mine that has the potential to significantly increase throughput at the operation4 . Conversion of the power plant to natural gas is anticipated to further strengthen the economics of the project.

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