(Bloomberg) -- Elko, Nevada is no Silicon Valley.

A recent front-page story in the local paper hailed inductees to the Buckaroo Hall of Fame, a nod to the town’s cowboy past. Inside, a full-page spread detailed the aspirations of the kids vying for homecoming king and queen.

Yet it’s here, in an unremarkable warehouse in the foothills of the Ruby Mountains, that Barrick Gold Corp. has created an in-house coding hub to design software for its nearby Cortez operation -- one step in its plan to use technology to revolutionize the business. From underground WiFi to sensors that track the output of every miner, it’s all part of what Cisco Systems Inc. Executive Chairman John Chambers calls an “audacious goal” by his Barrick counterpart John Thornton to drag gold mining into the 21st century.

“The challenge is to move from thinking of it as a series of tasks to a sort of self-perpetuating machine which becomes the culture,” Thornton said during a recent stop in Elko, about 420 miles (675 kilometers) from the bright lights of Las Vegas. “You move -- to make it slightly dramatic -- from being a mining company, to being a digital company that happens to be in mining.’’

It’s been 13 months since Thornton, 63, first unveiled his vision to team up with Cisco and transform Barrick’s Nevada operations into a high-tech blueprint for the rest of the company, starting with Cortez. Since then, the miner has created C0dem1ne, its Elko software hub; added autonomous mining equipment; and built a nerve center called the Analytics and Unified Operations Center. The latter will become Barrick’s “unblinking eye,” crunching a “data lake” of information fed by tens of thousands of sensors and spitting out analysis to employees.

This year’s digital budget of $50 million is a drop in the bucket for a company with a market value of about $17 billion. But under the watch of Chief Operating Officer Richard Williams, a former SAS commanding officer, Barrick has approached every spend with military precision.

“We have examined, and examined, and examined the value of our digital investment in ways that is out of all proportion to its number,’’ Williams said during a 90-minute drive from Elko to Cortez. “Why? Because we want to be absolutely sure, at every level of the organization, that this makes sense.’’

The shift has been challenging, with integration plans moving slower than expected, Williams said Thursday on a conference call with analysts.

“It is moving as fast as we can, but with respect to how I thought it would work a year ago it’s working slower than I would like,” he said. Still, the digital push remains “critical” to Barrick’s goal of reducing all-in gold mining costs to $700 an ounce, from an expected $740 to $770 an ounce this year, he said.

Investors have learned the hard way what happens when miners overspend on poorly conceived makeovers. Since 2010, Paulson & Co. estimates the gold industry has written off $85 billion, much of it for ill-advised mergers during the heady days when gold fetched $1,700 an ounce. Barrick has taken its own lumps, including over the debt-swelling 2011 purchase of Equinox Minerals Ltd. at the height of the commodity super cycle. The stock is still down more than 60 percent from its 2010 peak.

EFFICIENT MINING 

When Thornton first announced he would digitize operations to help make Barrick the most efficient mining company in the world, the response was muted. With the entire industry focused on wringing more out of existing operations, including better technology, the biggest question from analysts was: What is Barrick doing differently?

Just this month, Rio Tinto Group sent a driver-less iron-ore train 100 kilometers across Western Australia for the first time. Newmont Mining Corp., Barrick’s chief rival and neighbor in Nevada, has embraced sensors, autonomous equipment and virtual reality, and recently ran a “digital assessment” on one of its Nevada mines to pinpoint more opportunities.

“We use technology in all different places, but it’s more a fit for purpose approach,” Newmont Chief Executive Officer Gary Goldberg said at a mining conference last month in Colorado. “It’s still incremental; I don’t think it’s a step change.”

SUM OF PARTS 

Williams thinks it can be. Barrick’s goal -- which he says will be largely realized in the next two years -- is to integrate hundreds of incremental improvements into a larger system in which the sum becomes greater than the parts.

“Digital is a step change. It’s a multiplier,’’ he maintains, drawing on his experience with the U.K. military in Iraq where “electronic penetration” allowed commanders to view the entire battle space for the first time.

Already, unit costs have fallen from $190 per ton of rock to $140 at Cortez’s underground operations, he says, and full integration will result in “significant’’ dollar-per-ton margin improvements.

Three of C0dem1ne’s bespoke apps have been put into use at Cortez, including an interval control system common on factory floors that allows miners to adjust mine plans mid-shift. Another monitors the health of Cortez’s fleet of 350-ton trucks. Because it owns the data, Barrick can upgrade this software as often as needed. In-house technology also liberates the company from costly service contracts and allows it to track operations at a more granular level.

BARRICK SUPPLIERS 

That raises the question of how tech suppliers will respond to Barrick moving into their territory. In the case of its so-called short interval control, the company heard pitches from 14 outside vendors before deciding to design its own software. Barrick opted to turn off Caterpillar Inc.’s predictive maintenance software on its trucks once it was clear, employees say, their own app performed better.

“Clearly there are implications,’’ said Denise Johnson, Caterpillar’s group president of resource industries. “Not every mining company is going to want a full CAT solution.” 

That said, she thinks miner interest in technology will ultimately be good for Caterpillar’s business as long as it’s prepared to offer different combinations of equipment and software that interact with outside systems. “You have to be able to play in multiple ways and each customer is going to have to make a decision for themselves on how they want the pieces to come together,” Johnson said. “If we make ourselves completely closed we won’t even sell the equipment, let alone the digital solution or technology that is out there.”

ELKO JOBS 

As Barrick’s software efforts ramp up, attracting coding and developing talent to Elko may be another challenge. The company is hedging its bets, with a second coding facility at its Henderson office near Las Vegas. Further out, it hopes to create a more technologically skilled pool of local employees through an initiative with Cisco to create relevant courses at Elko’s Great Basin College.

Barrick also has moved to reassure its 3,000-strong Nevada workforce, and local officials, that digitization won’t mean significant job losses.

“I’ve been told it’s a net net on jobs,” Elko County Commissioner Cliff Eklund says over coffee and dessert at the Gold Dust West Casino. Eklund is a veteran of the mining industry, as his family’s drilling company held contracts with Barrick and Newmont for 50 years. During that time, technological improvements often proved neutral for employment, he says. Fewer drivers were required when haul trucks got bigger, but more jobs were created by processing increasingly complex ore.

Thornton’s hope is that digitization will give Barrick an edge developing other complex deposits around the world. Within the next three years he expects most of the heavy lifting will be done in terms of digitizing Barrick’s other mines. He and Williams are vague on future costs, saying only that cash flow will be made available for any projects that pay for themselves within 12 months and generate returns above 15 percent.

Meanwhile, the company is investing in other areas, including the use of artificial intelligence for exploration, and cyanide-free leaching, all of which have the potential to add revenue streams down the line. The latter could be key to developing Pascua-Lama and the El Indio belt along the Argentina-Chile border, a string of deposits that -- like Nevada -- Thornton believes the company will be mining for over a century.

“We want to be a leading 21st-century company in any industry, in any jurisdiction,” Thornton said. “That’s the goal. I don’t intend to leave until that goal’s accomplished.’’