VANCOUVER/TORONTO – For the first time in five years, Barrick Gold and other bullion miners are getting ready to expand, breaking from their monologue on cutting costs and debt because of tumbling gold prices.
Backed by healthier balance sheets, a 17 percent rise in the price of gold since January to $1,244 an ounce and new investors, miners from Canada to Australia and South Africa are studying ways to raise production.
At the world’s biggest gold miner, growth was not a priority in recent years, said Rob Krcmarov, Barrick’s vice president of exploration and growth, as the company sold assets to reduce its $14 billion debt by 40 percent. “Now some of our investors are starting to ask us: what is next?,” Krcmarov said. Barrick created a “growth committee” in March to evaluate in-house projects, exploration opportunities and acquisitions.
Early signs of activity include Kinross Gold’s March decision to expand its Mauritanian gold mine. In May, Goldcorp paid C$520 million ($406.44 million) for a gold project in Canada’s Arctic.
“What the sector will see is smaller, bolt-on type projects, brownfield expansions of existing mines. That’s going to account for the bulk of growth in new investment in the space,” said BB&T Capital Markets analyst Garrett Nelson.
Over the past half-decade, many mining companies have pared debt and overhead to build cash flow, that can be used to boost output, along with rising prices.
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