Industry Trend Analysis - Pueblo Viejo To Drag Down Growth - DEC 2015

BMI View : The Dominican Republic's gold productio n will fall significantly due to both lower ore grades and mech anical failure at the Pueblo Viejo mine over the coming quarters.

The Dominican Republic's gold sector will experience a notable decline in output over the coming quarters, due to both lower gold grade recoveries and mechanical issues at the Pueblo Viejo mine. The mine, a joint-venture by Canadian miners Barrick Gold (60%) and Goldcorp (40%), accounted for over 90% of the Dominican Republic's annual gold production in 2014. On November 19, 2015, the mine reported the sudden failure of two of three electric motors at the mine's oxygen plant. Barrick consequently lowered the firm's 2015 gold forecast, from 6.1-6.3 million ounces (moz) to 6.0-6.2moz. Pueblo Viejo accounts for approximately 10.4% of Barrick's total annual gold production.

In light of the above, we revised down our gold production growth forecast for the Dominican Republic, from 2.5% to -18.0% and 2.0% to -1.0% for 2015 and 2016, respectively. We expect the country's gold output to fall from 1.2moz in 2014 to 987 thousand ounces (koz) in 2015, declining further to 976koz in 2016. Beyond 2016, the country's gold production will recover modestly, supported largely by ongoing exploration of vast reserves at Pueblo Viejo, resulting in annual output growth averaging 1.5% during 2017-2019.

Production To Take A Hit
Dominican Republic - Gold Mine Production (moz) & Growth (% y-o-y)
e/f = BMI estimate/forecast. Source: BMI, USGS

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