May 25, 2012 / 8:57 PM / in 5 years

UPDATE 1-Barrick buys 7,000 acres around Cortez gold mine

* Barrick to pay Victoria Gold $24 mln for Mill Canyon

* Cortez is one of Barrick’s largest, lowest-cost mines

* Victoria Gold, Barrick shares close higher on Friday

TORONTO, May 25 (Reuters) - Barrick Gold Corp, the world’s largest gold miner, will pay $24 million to buy the Mill Canyon property in Nevada from Victoria Gold Corp, extending the property it owns in the vicinity of its prolific Cortez mine by about 7,000 acres.

The acquisition fits well with Barrick’s stated goal of focusing on developing its own pipeline of projects, rather than turning its attention toward major acquisitions, which typically carry higher costs and risks.

Cortez, one of Barrick’s largest and lowest-cost operations, last year produced about 1.4 million ounces of gold at cash cost of $245 each. It contains reserves of about 14.5 million ounces.

The site is also home to one of Barrick’s most promising new discoveries, Goldrush. Barrick has already delineated a resource of more than 7 million ounces at Goldrush and views it as one of its most significant finds in decades. It expects to boost its estimate on the size of the asset further in coming months.

Barrick already controls about 230,000 acres around Cortez.

The Mill Canyon property consists of claims that Victoria Gold bought from Newmont Mining Corp in 2003. N ewmont, the world’s No. 2 gold miner, has a back-in right to earn a 50 percent interest in the property.

In a statement on Friday, Victoria Gold said the sale of Mill Canyon, combined with the recent sales of some of its other projects in Nevada, would allow it to fund the development of its flagship Eagle Gold project in Canada’s Yukon Territory.

Victoria expects to raise about C$49 million from Mill Canyon and from the recent sales of its Cove and Relief Canyon properties. That excludes some potential payments and royalties that could add a further C$25 million.

The sale of Relief Canyon has already closed; the sales of the other two assets are expected to close in June.

Barrick will pay $19 million upfront for Mill Canyon and interests in the nearby Santa Fe property. It will pay Victoria a further $5 million should Newmont’s right to back into a joint venture on the property expire or be eliminated.

Shares of Victoria Gold closed 2 Canadian cents higher at 25 Canadian cents on the TSX Venture Exchange on Friday.

Barrick shares closed 1.2 percent higher at C$40 on the New York Stock Exchange, while its Toronto-listed shares closed 1.8 percent higher at C$41.24.

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