Barrick backs out of Nevada exploration JV

Barrick Gold (NYSE, TSX:ABX) has exited a joint venture agreement to develop a property in Nevada, citing budgetary constraints.

Barrick's partner in the project, Coral Gold Resources (TSXV:CLH), announced on Friday that Barrick, the world's largest gold producer, gave notice to terminate the Exploration and Option to Joint Venture Agreement on the Gold Ridge property, 100-percent owned by Coral Gold Resources. The agreement was signed on March 4, 2014.

"While it's unfortunate that Barrick could not find room in this year's exploration budget to continue the program, we are still confident that the Gold Ridge property maintains considerable exploration potential. Hole RGR-0002D intersected 5 feet of 34.4 g/t Au (1 oz/t) which could be an indication of a feeder zone, however, additional exploration is required to further understand the mineralized system," the Vancouver-based explorer said in a statement, adding: "Coral will continue to identify and evaluate potential partners that have the financial capability to advance the Robertson project into commercial production."

The company's stock was hammered by the news, losing 28 percent of its value to settle at $3.85 million market cap, as of Friday.

The 2014 agreement gave Barrick the option to earn a 60 percent interest in the property by incurring $12 million in exploration expenditures over five years. According to Coral, the company and various joint-venture partners have assembled an inferred gold resource of 2.7 million ounces along the Cortez gold trend on north-central Nevada, with 1,160 holes drilled (533,453 feet) and 101,757 gold assays taken since 1986.

Barrick has been shedding non-core and non-performing assets to try to cut its net debt. In its last quarterly statement, Barrick said it has committed to debt reduction of $3 billion in 2015, through asset sales and other initiatives; $200 million in capital expenditures have been earmarked for cuts this year. Barrick said in the statement it is moving ahead with a process to sell a stake in the Zaldivar copper mine in Chile, as well as the sale of gold mines in Australia and Papua New Guinea.