SANTO DOMINGO, Dominican Republic (AP) -- A Canadian joint venture and the government of the Dominican Republic announced an agreement Wednesday on new terms for the operation of a big gold mine, resolving an acrimonious dispute over whether the Caribbean country had gotten a fair royalty deal for its natural resources.
The new terms eliminate one of the most controversial provisions of the old contract, a requirement that the venture majority owned by Barrick Gold Corp. would not have to begin paying a net profit tax until it made a 10 percent return above the cost of its initial investment, according to the company and government officials.
The new agreement will increase the rate of payments to the Dominican Republic, helping the government address its budget deficit by providing an additional $1.5 billion over the life of the mine, Barrick spokesman Andy Lloyd said.
"We see ourselves as a long-term investor here and we see it as in our interest to support the economic stability of the country," Lloyd said.
Barrick, based in Toronto, and Goldcorp Inc. of Vancouver reopened the long-dormant Pueblo Viejo mine north of Santo Domingo last year. At nearly $4 billion, it is the largest single private investment in the country's history and the company had said it would provide about $7 billion in revenue to the government over the 25-year-life of the mine.
In recent months, the government sought to renegotiate the terms of the contract amid a budget shortfall and public anger over what many people felt was a deal that was overly generous to the joint venture. As negotiations bogged down, with the company insisting it had a legally binding contract, the government in March briefly detained a company shipment of gold and silver valued at nearly $12 million.
The proposed new contract must still be presented to the Dominican congress and receive approval from the board of directors of both Barrick and Goldcorp and lenders.