UPDATE 2-Barrick, Dominican Republic agree tentative gold deal revamp

Wed May 8, 2013 10:19pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

* New deal would replace contract signed by previous govt

* Would give country greater share in benefits of gold mine

* Eases investor uncertainty over project's outlook

By Manuel Jimenez

SANTO DOMINGO, May 8 (Reuters) - The Dominican Republic and Barrick Gold Corp have reached a preliminary agreement to boost the government's cut of profits from a gold mine in the Caribbean nation, easing investor doubts over the future of one of the world's largest new gold projects.

Dominican President Danilo Medina had demanded in February that the Canadian company renegotiate a contract signed with a previous government for the Pueblo Viejo mine, spooking investors as he threatened to clamp a windfall tax on profits if the deal was not modified.

The tentative agreement would increase the country's share in profits from the mine by about $1.5 billion over its 30-year life, with around half the cash flow from the project going to the government from 2013 to 2016.

At an estimated gold price of $1,600 per ounce, total tax revenues over that three-year period would be about $2.2 billion, both sides said on Wednesday at a press conference in the Dominican capital, Santo Domingo.

Spot gold was worth around $800 per ounce in 2009 when the original deal was struck, but then doubled to more than $1,600 before dropping back to around $1,470.   Continued...