Barrick Gold Corporation (ABX - Free Report) has announced the start of commercial production at the Pueblo Viejo gold mine in the Dominican Republic. Construction of the Pueblo Viejo mine, in which Barrick holds a 60% stake, involved capital cost of about $3.7 billion. Goldcorp Inc. (GG - Free Report) owns the remaining 40% stake in the mine.
During its construction phase, the project created more than 11,000 direct jobs and is expected to generate about 2,000 direct jobs and nearly 10,000 indirect jobs during its mine life of about 25 years with Dominicans accounting for nearly 90% of the full-time workforce.
Barrick’s 60% share of the 2013 output is expected to be in the range of 500,000-650,000 ounces. For the first full five years of operation, Barrick’s share is expected to be in the range of 625,000-675,000 ounces.
On the other hand, Goldcorp expects its share of gold production from Pueblo Viejo in 2013 to be in the range of 330,000 to 435,000 ounces. In its first full five years of operation, Goldcorp's share of annual gold production is forecast to be between 415,000 and 450,000 ounces.
The mine is expected to come into full capacity by the second half of 2013. Pueblo Viejo is one of the largest gold assets in the world, and is poised to become a world-class operation.
Barrick, with a number of world class mines under its jurisdiction, is an unhedged producer of gold and enjoys significant leverage to gold prices.
We currently have a long-term Underperform recommendation on Barrick Gold. The company, which competes with AngloGold Ashanti Ltd. (AU - Free Report) and Newmont Mining Corp. (NEM - Free Report) , maintains a Zacks Rank #3 (Hold).
Goldcorp is one of the world's fastest growing senior gold producers. We currently have a long-term Neutral recommendation on the stock. The company carries a short-term Zacks Rank #5 Rank (Strong Sell).