The Canadian parent company of Whitehall's Golden Sunlight mine recently merged with a major South African firm, making the mine's owners the world leader in mining for the most precious of metals while also clouding Golden Sunlight's future.
As of New Year's Day, Barrick Gold Corp., based in Toronto, and Randgold Resources, based in Johannesburg, became one. A day later, the market value of the new Barrick rose above $23.75 billion, putting Barrick safely in front of all the world's other gold mining companies.
But while Golden Sunlight is still mining and still pushing to get a new underground mine known as the Apex fully underway, the merger cast some shadows over the mine’s outlook.
The mine's size and life span are limited: it has an estimated 150,000 ounces of recoverable gold, and last year, the Montana Department of Environmental Quality permitted the Apex through 2021. But according to company officials, the new Barrick is putting an emphasis on its largest gold mine holdings that have at least 10 years of mine life ahead of them.
“Golden Sunlight doesn’t fit that spectrum,” Catherine Raw, Barrick chief operating officer, said Thursday. “And yet there is an upside in Golden Sunlight. It has a strategic advantage. It’s established in Montana. It has a good relationship with the community.”
The company is still determining what the next steps will be for Golden Sunlight, Raw said, but it could go up for sale. For the time being, work is continuing apace, and the team behind it isn't expected to alter.
Raw said that while there are changes taking place at the top – Mark Bristow, Randgold’s chief executive officer, is now leading Barrick – the roughly 140 employees at Golden Sunlight will likely remain at work in Whitehall.
The bulk of those workers are contracted through Redpath, a Canadian-based mine drilling company.
Barrick sold some assets in late 2016 or early 2017 and, at the time, there were questions about whether Golden Sunlight might be a part of that sale. It was not, but selling the mine to another buyer is not completely out of the picture, Raw said.
Golden Sunlight will “have more scrutiny on them than they had in the past,” Raw said. “We’re very focused on delivering.”
Bristow has a reputation for prioritizing for shareholders. But Randgold, which he started in the 1990s, has weathered dips in gold prices better than most.
The Apex is mobilizing this week with the expectation that the underground gold mine will be fully producing ore and in production by the end of the year, said Dan Banghart, general manager.
Banghart said miners expect to be cutting out the tunnel to the Apex in the next few months, and workers anticipate drilling and mining in the spring or early summer.
But the Apex is behind schedule, and not everything is set in stone, Banghart said. The delay was caused by a need to do more metallurgical drilling so the company can better understand the ore body. That work is necessary before Barrick will release the capital to mine the Apex.
“Mining takes a lot of capital,” Banghart said. “The more confidence we can build in what we’ll have when we get done is better for Barrick decision-making to release the capital for us to invest.”
Exploring the ore body at the Apex could help to determine Golden Sunlight's future. Until company officials know “what that mine life really looks like, you have nothing to sell or close,” Raw said.
“That’s why the Apex will be so important,” she said. “To be very transparent, it’s not core to our portfolio. If someone can add more value to it with their portfolio, that (selling it) would be an option.”
Meanwhile, the ore deposit along 2Bug, is mined out. 2Bug was the underground gold mine that enabled Golden Sunlight to continue mining after the 2015 closure of the operation's open pit. Banghart said last year that the company hoped to keep mining 2Bug into this year.
But the company is still hanging on. It is still mining, Banghart said. Workers have tapped into an ore body in the southern area of the pit, and that is expected to go into the spring or summer and maybe even into the fall.
“That gives us more breathing room,” Banghart said.
Raw said that after drilling on the Apex is underway, Barrick will determine what the next step will be.
The price of gold is currently $1,296 an ounce. Banghart said the price of gold could also be a factor in the future of the Apex, linked inextricably now with Golden Sunlight’s future.
“This is not a screaming financial project where you just throw caution to the wind and throw money and people at it. It’s not that type of project,” Banghart said. “It’s a lot closer to the margins than what you’d like.”