Barrick To Suspend Operations At Lumwana Amid Higher Royalty Rate - Quick Facts

(RTTNews) - Barrick Gold Corp. (ABX, ABX.TO) announced it will initiate procedures to suspend operations at the Lumwana copper mine in Zambia following the passage of legislation that raises the royalty rate on the country's open pit mining operations to 20 percent from six percent.

The new taxation regime, which is expected to go into effect on January 1, 2015, eliminates corporate income tax, but imposes a 20 percent gross royalty on revenue without any consideration of profitability.

In the meantime, the company will initiate procedures to transition Lumwana to care and maintenance, with the transition to care and maintenance expected to be completed in the second quarter of 2015.

The company also noted that major workforce reductions are planned to commence in March, following the legally required notice period.

In the absence of a modification to the newly-adopted royalty regime, Barrick expects to record an impairment charge related to Lumwana in the fourth quarter of 2014. Lumwana's current net carrying value is approximately $1 billion.