Barrick Reaches Agreement in Principle on Pueblo Viejo - Analyst Blog
May 14 2013 - 9:10AM
Zacks
Barrick Gold Corporation (ABX) announced that
Pueblo Viejo Dominicana Corporation (PVDC) has reached an agreement
in principle with the Government of the Dominican Republic
regarding amendments to the Pueblo Viejo Special Lease Agreement.
The Pueblo Viejo mine is operated by PVDC. Barrick owns about 60%
of PVDC with Goldcorp Inc. (GG) holding the
balance.
The agreement in principle was reached after successful
discussions between the local government and PVDC for about eight
months. It preserves the economic value of the Pueblo Viejo mine.
The agreement in principle will also address the fiscal objectives
of the Dominican Republic.
If the proposed amendments are implemented, revenues to the
government will increase through a number of proposed changes to
the lease agreement.
Based on the proposed amendments, it is expected that that the
estimated cash flows from the mine will be split equally between
PVDC and the government from 2013 to 2016. Thus, tax revenues to
the government will be about $2.2 billion over this period at a
gold price of $1,600 per ounce.
The proposed amendments are subject to the negotiation of a
Definitive Agreement, which will require the approval of the Boards
of Barrick and Goldcorp along with the project lenders. The
amendments will also require the approval of the Congress of the
Dominican Republic.
The local government has also reaffirmed its commitment to
facilitating the timely granting of permits and other requirements
necessary for the ongoing operations at Pueblo Viejo.
Barrick, which is among the prominent players in the gold-mining
industry along with Goldcorp., Kinross Gold
Corporation (KGC) and Newmont Mining
Corporation (NEM) currently retains a Zacks Rank #5
(Strong Sell).
BARRICK GOLD CP (ABX): Free Stock Analysis Report
GOLDCORP INC (GG): Free Stock Analysis Report
KINROSS GOLD (KGC): Free Stock Analysis Report
NEWMONT MINING (NEM): Free Stock Analysis Report
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