UPDATE 2-Barrick to re-calculate gold reserves at $1,100 -CEO
By Nicole Mordant and Allison Martell
Jan 23 (Reuters) - Barrick Gold Corp will use a lower-than-expected gold price to estimate its bullion reserves, its chief executive said on Thursday, making some of its in-the-ground gold uneconomical to mine and may result in asset writedowns.
The world's biggest gold producer will re-calculate its reserves at a gold price of $1,100, down from $1,500 a year ago, resulting in a decrease in its reserve base, CEO Jamie Sokalsky said.
At 140 million ounces, Barrick's reserves are the biggest in the industry and equal to about 20 years of production for the miner. Reserves are those parts of an ore body that are economically feasible to extract.
"We've taken a conservative approach this year and we're going to value our reserves at $1,100 per ounce as well as running the mine plans at $1,100 per ounce," Sokalsky said at a conference in Whistler, British Columbia.
Gold's price rise in 12 of the past 13 years made lower-grade ore profitable to extract, allowing miners to expand their reserves. But a 28 percent decline in the price of gold in 2013 to just above $1,200 at year-end means that mining some of those reserves would no longer pay off. Analysts had expected most miners to use a gold price of $1,200 to re-calculate their reserves.
Sokalsky did not say by how much Barrick's reserves would fall but the company has previously said that using a gold price of $1,200 would cause its reserves to drop by less than 10 percent.
Miners usually re-calculate their reserves once a year in the first quarter and release the updates with their fourth-quarter and year-end results. Barrick is due to release its results on February 13. Continued...