UPDATE 1-Barrick announces tentative deal at Pueblo Viejo

Wed May 8, 2013 7:26pm EDT
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By Manuel Jimenez

SANTO DOMINGO May 8 (Reuters) - The government of the Dominican Republic and Barrick Gold Corp announced jointly on Wednesday that they had reached a preliminary agreement that would significantly increase the government's share of benefits from the Pueblo Viejo gold mine by about $1.5 billion over the lifetime of the mine.

The company now expects about half of the cash flow from the mine to go to the government from 2013 to 2016. At a gold price of $1,600 per ounce, total tax revenues over that period would be about $2.2 billion, it said on Wednesday.

"We have shifted the timing, but also, under this agreement, they will get more ... an extra $1.5 billion over the life of the mine," said Andy Lloyd, spokesman for Barrick, the world's largest gold mining company.

Dominican President Danilo Medina had demanded in February that the company renegotiate its operating contract, and threatened to clamp a windfall tax on profits if it was not modified.

Pueblo Viejo, one of the world's largest new gold projects, is jointly owned by Barrick and Goldcorp Inc.

The government had said the original contract awarded to the two Canadian companies to operate the Pueblo Viejo mine, one of the world's biggest new gold projects, was overly generous and will have to be renegotiated.

Barrick announced recently that it had achieved commercial production at the mine, which took nearly four years and cost $3.7 billion to build.   Continued...