Barrick Gold Corp., the world's largest producer of the precious metal, may buy smaller assets near existing mines as part of its strategy to boost output. Barrick will look at such opportunities while also focusing on larger, “substantive” projects, Chief Executive Officer Aaron Regent said in a Nov. 9 interview with Bloomberg at the company's Toronto headquarters. “It's almost like a brownfield expansion, if there is a small mine that we discover or potentially acquire, because you bolt it on to existing infrastructure,” he said. Regent, 45, said Barrick wants a “balanced approach” to increasing production that includes acquisitions, project development and finding deposits through exploration. World gold supply will remain constrained even amid rising prices because few big new deposits have been discovered, he said. “The industry is going to continue to struggle to maintain supply,” he said. “It might go up a little bit, but then it's going to come back down.” Barrick is forecasting its own gold production will be 7.6 million to 7.8 million ounces this year. Output was 7.8 million ounces in 2010. The company is targeting annual output of 9 million within five years. Barrick increased its copper output with its July purchase of Australia's Equinox Minerals Ltd. in July for C$7.5 billion ($7.4 billion), which gave it a mine in Zambia and a development project in Saudi Arabia. That deal hasn't altered Barrick's strategy, Regent said. “We're really focused on trying to acquire or discover world-class, long-life deposits,” he said. “When these assets become available, you've got to take a real hard look at them.” Barrick's Pueblo Viejo mine in the Dominican Republic and Pascua-Lama mine on the Chile-Argentina border are scheduled to start production in 2012 and 2013 respectively. The company is also studying nine other development projects. Lower-grade gold deposits, which only become economic at higher gold prices, need to operate at high volumes to be profitable, Regent said. That means they may become more expensive to build. “The capital costs of these lower-grade deposits are going to be in the billions of dollars,” he said. “There's not a lot of companies in the gold space” that can take on projects costing $3 billion to $5 billion, he said. Barrick fell 0.4 percent to C$52.02 in Toronto yesterday. It has declined 2.1 percent this year, while the Philadelphia Stock Exchange Gold and Silver Index has fallen 9.3 percent. Gold has gained 24 percent. Regent said gold equities will outperform the metal in the future, after trailing this year. He said he doesn't expect to see a return to hedging, or forward-selling, by producers. “I think the market has made it very clear that they are buying a gold equity because they want the exposure to the gold price,” he said.
