Barrick Gold Corp. (ABX ) informed the market Monday about the end of the unexpected strike that one of the trade unions that represents the personnel employed at the Veladero mine in the province of San Juan in Argentina started on May 28.
The biggest gold producer in the world says that it is now talking with the leaders of the trade union "to address issues of concern."
Barrick Gold also said that these issues with the employees at Veladero are not keeping the company from doing the necessary corrective work and maintenance at the mine to restore operations after a breakage in the pipeline carrying the solution used by the company during heap leaching activities spilled out at the Argentinean mine on March 29.
The picture below shows the heap leaching method where the concentrate is accumulated in a heap and the cyanide solution is spread over the surface from the heap to leach metal.
The heap leaching is a method to obtain gold using the percolation extracting process. The leaching reagent is sprayed over the heap – a pile of mineral ore – and the metal solubilizes as the reagent passes through the pile. Then the percolator that contains the precious metal is collected into a basin. The drained solution is sent to the next phase of gold recovering.
Barrick Gold expects to resume normal activities at the heap leach facility of the Veladero mine sometime between the third and the last week of June, conditional to the permission of the Argentinian authorities.
The gold stock has already lost 14% on the New York Stock Exchange since the incident at the Argentinian asset happened, as you can see from the picture below.
This issue might produce a sharper decline in Barrick Gold’s market value if the Canadian miner will miss expectations on both revenues and earnings for the second quarter because of fewer ounces of gold produced and sold at Veladero.
This depreciation of Barrick Gold’s shares makes one ounce of the world's biggest gold producer’s proven and probable gold reserves more appealing at an EVO of $313.98 compared to one of its more direct peers, Goldcorp Inc. (GG, Financial), which has an EVO of $344.49.
The EVO metric is calculated as the enterprise value of the company divided by the total amount of its proven and probable gold reserves.
Disclosure: I have no positions in any stock mentioned in this article.
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