The Dominican Republic’s Congress will review and possibly seek to change a contract with Barrick Gold Corp. (ABX) over the development of a $4 billion mine in the Caribbean’s biggest economy.
Congress will review the contract with the Toronto-based company in a bid to make the terms “more favorable” for the country, according to statement posted on the legislature’s Twitter page. The statement linked to a story published today in Santo Domingo-based newspaper Diario Libre saying Congress will seek to change the contract for the Pueblo Viejo gold and silver mine. A congressional official, who asked not to be identified, confirmed the statement.
The Dominican Republic’s move comes after Barrick in November delayed the expected start of production at its Pascua- Lama project on the border of Argentina and Chile to the second half of next year from mid-2013 and raised the cost estimate for the mine to as much as $8.5 billion. Yesterday the company said performance at its Lumwana copper mine in Zambia was “unacceptable” because of production costs, according to Chief Executive Officer Jamie Sokalsky.
‘Willing to Discuss’
Production at Barrick’s Pueblo Viejo mine will represent as much as 20 percent of the Dominican Republic’s exports this year, Industry and Commerce Minister Jose Del Castillo Savinon said in a Dec. 3 interview. The Pueblo Viejo mine, which is a joint venture with Goldcorp Inc. (G), is forecast to produce as much as 1 million ounces of gold this year with commercial sales that may reach $2 billion, Del Castillo said.
“We are very confident in the integrity of the agreement we have in place,” Andy Lloyd, a Barrick spokesman, said in an e-mailed statement. “It is legally binding on both the company and the state and cannot be changed unilaterally by either party. However, Barrick views the government of the Dominican Republic as a partner and is always willing to discuss in good faith the circumstances of the company’s operations in the country.”
Barrick’s shares closed falling 1.3 percent in New York trading to $32.39.