MINING: Long Canyon project development in Nevada will be phased to cut risk

or $4 billion,” said Goldcorp Chief Executive Chuck Jeannes. Goldcorp, the world’s most valuable gold miner by market capitalization, owns stakes in a number of joint-ventured assets such as the Alumbrera gold mine in Argentina and the Pueblo Viejo gold mine in the Dominican Republic.

The price of gold has fallen as concerns about inflation receded and the U.S. dollar rose against most major currencies. Gold is often used as a hedge against inflation, as prices typically rise when the dollar weakens.

Barrick Gold, the world’s largest bullion producer, could be the poster child for problem-plagued mega-mines.

Its Pascua Lama project in the Andes was mothballed in 2013, bogged down by environmental issues, labor unrest, political opposition and development costs that ballooned to $8.5 billion.

“A phased approach to developing large, complex capital projects makes a lot of sense,” Barrick spokesman Andy Lloyd said. “There is potential to mitigate development risks, reduce upfront capital requirements and expedite initial cash flows from the project, which could be used to fund future expansions.”

Barrick has no new mine plans currently, as it sells assets to trim a $13 billion debt.

Last week, it announced a strategic tieup with Zijin Mining, selling a stake in its Papua New Guinea mine as a first collab- orative step with the Chinese miner.

Newmont Mining, the world’s No. 2 gold producer, decided to start small with its recently announced Long Canyon project in Nevada.

The first phase is a $250 million to $350 million development funded with cash flows and available cash, using existing staff. Payback is projected in just more than four years.

Rather than building all the infrastructure for future phases upfront, this approach makes each successive phase carry and provide its own return-on-investment, Newmont CEO Gary Goldberg said.

“From an investor standpoint, it’s a good thing because it minimizes the risk involved,” he said.

Yamana Gold is building Cerro Moro in Argentina for $265 million over two and a half years. It will be Yamana’s smallest operation on a throughput basis, or the volume of ore processed each day.

Last year, the average annual projected gold output from projects that just went into construction and entered production was 15 percent lower than five years earlier, according to SNL Financial data.

Last year there were also more small mining debt and equity issues, correlating to the size of mines being built.

The average issue in 2014 was $128.1 million, Thomson Reuters data shows, while the average for the preceding seven years only fell below $160 million one other time.