Anglo-Tanzanian miner African Barrick Gold PLC (ABG.LN) whose parent is Canadian mining company Barrick Gold Corp (ABX) plans to develop its Golden Ridge project in Tanzania as a satellite to its existing Buzwagi gold mine from 2013, the company’s chief executive said Tuesday.

African Barrick Gold expects to produce 50,000 troy ounces of gold annually from the Gold Ridge project, making it a key component of the company’s growth strategy to increase production by 40% by 2014.

The mining company, whose parent is Canadian mining company Barrick Gold Corp (ABX), previously said it is targeting gold production of one million troy ounces by 2014, up from around 700,000 ounces, via brownfield and greenfield expansions. It also expects to pursue production growth through mergers and acquisitions.

“Last year we outlined four projects that represented strong organic growth. Golden Ridge was one of those projects,” he said. The projects include an underground mine at North Mara, life extension at the Tulawaka mine and rehabilitating access to the Upper East Zone of the Bulyanhulu mine. Each of these projects is expected to add about 50,000 ounces of additional gold output, Hawkins said.

Aside from organic-growth plans, African Barrick Gold also plans to use its $400 million cash war chest to diversify its geographic reach beyond Tanzania, Hawkins said.
“We’re going to be [in Tanzania] for a long time but we also see a strategic need to diversify,” he said. The company has looked at a dozen potential transactions already, half of which resulted in a closer investigation, Hawkins said.

The company is interested in assets in northeast Africa and West Africa. Assets in northeast Africa are located primarily in Eritrea and Ethiopia and, to a lesser extent, in Egypt. Egypt is “probably not our favored destination even before” the unrest, Hawkins said, referring to the popular uprising that led to the ouster of its long-time president Hosni Mubarak. In West Africa, the company is interested in locations such as Mali, Burkina Faso and Senegal, Hawkins said.

He acknowledged that gold-asset valuations are pricey at the moment. “We have to exercise a bit of patience,” in order to find the asset that is right for the company, he said.
He noted that the company has looked at a range of assets but wouldn’t look at any projects that would drag the average cost of its projects up by too much.

Hawkins said the company’s operations sit just below the mid point of the gold industry’s cash-cost curve, which is $570/oz to $580/oz.

Hawkins said he remains bullish about gold prices in the long term. He said he expects gold could top $1,500 a troy ounce in 2011, a similar trend echoed by Randgold Resources Ltd. (GOLD, RRS.LN) CEO Mark Bristow. Hawkins also noted that the jewelry market seems to be adapting to the new gold-pricing environment, as evidenced by the fact that, when the price of gold falls by $100/oz, jewelry demand picks up.

Exchange-traded funds are also providing a new source of demand while central banks, such as China’s, are showing appetite for the yellow metal. From a supply perspective, “the cost curve of the industry has marched upward,” which has provided a higher support level for gold prices, Hawkins added.

Separately, Hawkins said access to electricity is an issue for the company in Tanzania but he is encouraged by the Tanzanian government’s efforts to boost output and transmission-line capacity.