Vancouver-based Placer Dome has approved the US$1bn Pueblo Viejo gold project in the Dominican Republic for development.

In addition, a 140MW power plant to support the mine is planned to be constructed at a capital cost estimated at about US$350mn.

“The Pueblo Viejo project demonstrates the technical strengths of our company,” comments Peter Tomsett, Placer Dome’s president and CEO. “We identified the potential of this deposit and have developed it into a long-life, low-cost opportunity for our shareholders. Projects of this size and grade remain rare in the gold business.”

The Pueblo Viejo project is expected to produce around 12mn ounces of gold at average cash costs between US$200 and US$210 per ounce over 20 years. Capital costs for the mine are estimated at about US$1 billion. In the initial six years of the mine’s operation, Pueblo Viejo is expected to produce on average 800,000 ounces of gold per year at cash costs between US$175 and US$185 per ounce.

The power plant will be located on the southern coast of the Dominican Republic and will be integrated into the national power grid. The plant will be designed to produce power from a variety of fuels, including coal and petroleum coke.

“Placer Dome is entering an exciting phase in the company’s history with the development of Pueblo Viejo and the Cortez Hills project in Nevada,” Tomsett says. “These two projects demonstrate our ability to create value from our exploration and development programmes.”

It is anticipated that the Pueblo Viejo and Cortez Hills projects will each be funded from current cash resources and cashflow generated during the construction periods. “Our strong financial position allows us to proceed with these two projects with no requirements for additional equity financing”, notes Tomsett. “Due to the capital requirements of Pueblo Viejo, we are examining appropriate risk management strategies for the project. About 1 million ounces of our existing gold forward sales positions will be allocated to Pueblo Viejo to support its development.”