Barrick Gold Corp. said it made two "significant" gold discoveries in Nevada as the company strives to rebuild its focus on the precious metal even as it moves deeper into copper.
The discoveries by the world's largest gold company come as the price of the metal continues to trade near record highs, despite a sharp pullback on Wednesday, and miners scramble to secure what's left of the world's shrinking resources.
While Barrick stands to capitalize on its new discoveries, the cost of building new mines is soaring. Barrick reminded investors of that reality Wednesday as it announced the price tag for its Donlin Gold joint venture mining project with NovaGold Resources Inc. will rise by about 50 per cent to $7-billion (U.S.).
Barrick chief executive officer Aaron Regent said these are challenges for the industry, "but I think companies like Barrick are in the best position to mitigate and manage," while continuing to increase production.
Part of Toronto-based Barrick's strategy is to find more resources near existing mines, which is why it hiked its exploration budget by 80 per cent to about $390-million this year.
Mr. Regent told investors at a presentation in Toronto on Wednesday that the new discoveries in Nevada, named Red Hill and Goldrush, "reinforce the value that a focused and disciplined exploration program can create."
The discoveries have similar geology to Barrick's Cortez Hills and Goldstrike mines that each produce more than 1 million ounces annually, the company said.
TD Securities analyst Greg Barnes said in a note: "While the discovery is relatively early-stage, the grades and widths to date are impressive and the proximity to existing operations make this a potentially important discovery for Barrick."
Red Hill is estimated to contain up to 3.5 million ounces of gold, while Goldrush is still being drilled.
Barrick is expected to produce about 7.8 million ounces of gold this year, with a goal of hitting 9 million ounces in five years.
The company is also planning to boost its copper production with this year's controversial purchase of Equinox Minerals Ltd. for $7.3-billion (Canadian). That changes its revenue mix to about 80 per cent gold and 20 per cent copper, compared to a previous 90-10 ratio.
Investors were taken aback by the purchase of a pure copper producer and punished Barrick by driving down its shares for months after the deal was announced in late April.
Barrick's stock has since bounced back alongside the surge in the price of gold, which hit a record $1,920 (U.S.) an ounce this week. Gold fell 3 per cent to close at $1,817.60 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday, as investors took profits and other commodities such as oil and copper rallied.
Barrick shares closed at $53.71 (Canadian) on Wednesday, just shy of its 52-week high of $55.64 set in December.