BUSINESS

Barrick says it's nearing an agreement with local government on Pueblo Viejo

05/08/2013 07:29 EDT | Updated 07/08/2013 05:12 EDT
TORONTO - Barrick Gold Corp. (TSX:ABX) says it is nearing a firm agreement with the government in the Dominican Republic over its Pueblo Viejo mine.

The company has reached "an agreement in principle" that would see the local government receive a higher revenue from the project through various changes to a lease agreement, it said after stock markets closed on Wednesday.

Barrick says the changes would result in an even split of cash flows from the mine divided between the corporation that operates the mine and the government from 2013 to 2016.

The company says under the proposal, the country's government would receive tax revenues of about $2.2 billion over the period, and provide an additional $1.5 billion to the Dominican government over the life of the Pueblo Viejo mine.

The mine is run by Pueblo Viejo Dominicana Corp., with Barrick holding a 60 per cent stake, while with Goldcorp (TSX:G) owns the rest.

For the agreement to be reached, Barrick will need to reach new terms with the government, which it said could include such factors as an extension of the window to recover its capital investment and reduced depreciation rates.

Pueblo Viejo reopened last year and is among the world's largest gold mines.

The government has sought to re-open the contract to help close a budget deficit. Previously, the venture was expected to pay about $7 billion over the 25-year life of the mine.