The deal amends the Pueblo Viejo Special Lease Agreement (SLA) and follows eight months of discussions between the government and Pueblo Viejo Dominicana Corporation (PVDC), the operator of the mine.
Based on the the proposed amendments, half of the estimated cash flows from the Pueblo Viejo mine is expected go to the government over the 2013-2016 period, and is expected to generate tax revenues of nearly $2.2bn during this period, at a gold price of $1,600 per oz.
The proposed changes could provide an additional $1.5bn to the Dominican Government over the life of the mine.
Last month, Barrick said that the two sides could not reach an agreement over the Dominican Government’s demands for a higher tax on the mine and threatened to take the government to an international arbitration court, reported The Wall Street Journal.
But the miner said in a statment on Wednesday that the agreement preserves the economic value of the Pueblo Viejo, while "addressing the fiscal objectives of the country".
The proposed amendments are subject to signing of a definitive agreement, which will require approval from the boards of directors, along with the project lenders.
The definitive agreement will also be subject to approval by the Congress of the Dominican Republic.
Pueblo Viejo is a low-cost mine with an estimated life of more than 25 years, and is expected to contribute an average of 625,000-675,000oz of gold per year to Barrick in its initial full five years of production.
The primary sulphide minerals at the mine comprise 75% Pyrite in veins.
Image: The main sulphide minerals at the Pueblo Viejo mine comprise 75% Pyrite in veins. Photo: Courtesy of JJ Harrison.