Barrick Gold confirmed yesterday (29th October) that it has dropped plans to develop the Sedibelo platinum project in South Africa.

The world's largest gold producer currently holds a ten per cent stake in the site but was widely expected to secure a $106 million deal to increase its interest to 65 per cent.

However, platinum prices slumped considerably in the second half of last year as the global financial crisis took hold, forcing the company into a major rethink.

Despite a successful bankable feasibility study, a further "thorough review" in the first half of 2009 convinced Barrick that the money would be better spent elsewhere.

"We spent a lot of time looking at how we could optimise the project to improve the rate of return, but ultimately we concluded that it didn't really meet our return thresholds," said CEO Aaron Regent.

"It's not really a core asset for us … so we concluded that that's somewhat off-strategy for us and that we have better uses of that capital."

Mr Regent added that the first phase of construction at Sedibelo would have required an investment of over $400 millon, on top of the outlay on snapping up a larger holding.

Barrick Gold received the earn-in option on the project when it bought Placer Dome in 2006 - a deal which put it ahead of Newmont Mining as the world's biggest gold company.

Source:

Barrick backs off SA platinum project (29/10/09)

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