Barrick Gold Corp. will work with a prominent Saudi Arabian miner to develop its copper mine in the country, a partnership that the Canadian company aims to replicate with other projects such as its mothballed Pascua Lama in the Andes.
The Saudi Arabian Mining Company (Ma’aden) will pay $210 million (U.S.) to own half of Barrick’s Jabal Sayid copper asset, which has been delayed due to regulatory hurdles in the Kingdom.
Barrick, the world’s largest gold producer, said the state-owned Ma’aden’s “extensive experience in the Saudi Arabian mining sector,” would help move the project to completion.
Jabal Sayid is expected to start operating in 2015 with annual production of about 100-130 million pounds of the red metal during its first five years of operation, according to Barrick.
The joint venture marks the first partnership the company has formed since John Thornton became Barrick’s executive chairman earlier this year.
Mr. Thornton has spoken to media about developing a long-lasting relationship with China, currently the world’s biggest gold producer and consumer.
“The concept of partnering with either governments or sources of capital or other mining companies to develop other assets will be a focus for us,” said Barrick spokesman Andy Lloyd.
Barrick acquired Jabal Sayid when it bought Equinox Minerals Ltd. in 2011 to gain control of the large Lumwana copper mine in Zambia.
Barrick has since written down the copper asset and raised funds to reduce the massive debt incurred with the Equinox acquisition.
Ma’aden will own half of the Saudi Arabian mine’s copper production. Mr. Lloyd said Barrick had no active plans to divest copper assets.
After a tough year where the company recorded $11.5 billion in writedowns and suspended its key Pascua Lama project amid cost overruns, Barrick has shifted its strategy on project development.
Instead of sinking billions of dollars to develop a large asset by itself, the Canadian miner said it would take a more measured approach to building a mine.
In addition to Pascua Lama, Barrick has shelved its other big projects: Cerro Casale in Chile and Donlin Gold in Alaska.
The Saudi Arabian deal is expected to close in the fourth quarter of this year.
Mr. Lloyd said the alliance with Ma’aden would help Barrick explore other opportunities in Saudi Arabia.