Barrick Gold has announced that Pueblo Viejo Dominicana Corporation (PVDC), operator of the Pueblo Viejo mine, has signed a 10-year natural gas supply contract with AES Andres DR SA in the Dominican Republic that will enable the conversion of the Quisqueya I power generation facility from heavy fuel oil to natural gas. PVDC is a joint venture between Barrick (60%) and Goldcorp Inc (40%).
Quisqueya I was originally supplied by Wartsila and is owned and operated by PVDC and supplies power to the Pueblo Viejo mine. Converting the facility from heavy fuel oil to natural gas is expected to reduce the mine’s average cost of sales and all-in sustaining costs by approximately $54 per ounce over the life of the mine, supported in part by higher margins on the sale of excess power to the national energy grid. Cost savings expected from the conversion of the facility from heavy fuel oil to natural gas are reflected in the company’s most recent consolidated cost guidance for 2019 to 2022.
“Pueblo Viejo is already a core asset with industry-leading margins and a strong track record of operational excellence,” said Greg Walker, Senior Vice President, Operational and Technical Excellence. “Converting the mine’s power plant to natural gas is expected to reduce Pueblo Viejo’s cost structure and drive incremental improvements in cash flow over the life of the mine, driving additional long-term value for our owners, as well as our government and community partners.”
In addition, the use of natural gas is expected to reduce greenhouse gas emissions associated with Pueblo Viejo by approximately 260,000 CO2 equivalent tonnes per year. PVDC will invest roughly $7.5 million to convert Quisqueya I to natural gas, an investment that significantly exceeds Barrick’s 15% hurdle rate. AES will construct a new gas pipeline to the facility, with commercial gas production expected to begin in the second half of 2019.
Barrick is currently advancing prefeasibility-level studies for a plant expansion at the Pueblo Viejo mine that has the potential to significantly increase throughput at the operation. Conversion of the power plant to natural gas is anticipated to further strengthen the economics of the project.