Gold Discovery Sends Chill Through Market

This may not be exactly what the gold market wants to hear.

Barrick Gold Corp., the world’s fourth-largest gold producer, said Wednesday that its mine in Tanzania holds 40% more of the metal than it previously estimated.

The Bulyanhulu mine has 10.5 million ounces of gold, up from an estimated 3.7 million when Barrick bought the mine in 1999, Chief Executive Randall Oliphant said.

The mine will start production in the second quarter of next year and add to the company’s reserve base, which stood at 59 million ounces at the end of last year, Oliphant said.

“We think the Tanzania mine is a good example of why Barrick is a good investment,” Oliphant said.

But more supply may not thrill the gold market. Near-term gold futures in New York fell $1.30 to $270.30 an ounce on Wednesday. The price is not far above 20-year lows reached in 1999.

Producers say the market’s demand-supply equation would favor suppliers--if only major central banks would stop selling gold reserves.

Barrick shares (ABX) rose 19 cents to $15 on the NYSE.