TORONTO (miningweekly.com) – Canadian gold giant Barrick Gold has decided not to develop the Sedibelo platinum project, in South Africa, as it believes the funds can be better spent on other assets, CEO Aaron Regent said on Thursday.

Barrick owns 10% of the project, and could increase its holding to 65% by paying about $106-million and making a construction decision in the current quarter.

The company completed a bankable feasibility study on Sedibelo last year, and the then-CEO Greg Wilkins said in May 2008 that the project appeared “robust”.

However, after platinum-group metals prices declined in the second half of 2008, Barrick started looking at other development alternatives for the project, and conducted a “thorough review” in the first half of this year.

“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,” Regent said on Thursday.

He said the first phase of construction would likely have required commitments of more than $400-million from Barrick, plus the $106-million payment.

“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,” Regent said.

“It wasn't an easy decision but we think it's the right one, to basically withdraw.”

Barrick recorded an impairment charge of $158-million related to the Sedibelo project in its third-quarter results, after reducing the carrying amount of the company's investment in the project and related assets to just $6-million.

The Bakgatla Ba Kgafela community owns Itereleng Bakgatla Mineral Resource, the firm that owns the mineral rights to the project.

Assuming Barrick does not announce a decision to develop the project by the end of the fourth quarter, the company's partner will have 90 days to buy the gold-miner's 10% interest by reimbursing Barrick for direct and proven costs of prospecting activities and the cost of compiling the feasibility study.

Barrick inherited the earn-in option on Sedibelo when it bought smaller peer Placer Dome in 2006.

The project is located on the western limb of the prolific Bushveld Complex in South Africa, about 200 km from Johannesburg.

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