Barrick Gold Corp. (ABX), the world’s largest gold miner, said production at its Pascua-Lama project won’t start in the second half of 2014 as planned because of demands from Chile’s environmental agency.
The delay at the mine on the border of Chile and Argentina is expected to lead to higher capital costs, the Toronto-based company said yesterday in a filing. Barrick raised the cost estimate for the project twice last year, to as much as $8.5 billion, and said output would be delayed by more than a year from its previous forecast.
Chile’s environmental regulator, known as SMA, fined Barrick last month and ordered work to protect nearby water supplies before construction on the Chilean side of the project can resume. Work was stopped by a Chilean court in April after it accepted an injunction filed by indigenous communities concerned about damage to glaciers.
“The company is in the process of reviewing the SMA resolution in detail and is in discussions with Chilean authorities regarding the implications,” it said in the filing. “Barrick is unable to fully assess the impact of the SMA resolution on the capital budget, operating costs and schedule of the Pascua-Lama project at this time.”
Barrick dropped 1.7 percent to C$21.57 at the close in Toronto.
Pascua-Lama was expected to produce an average of 800,000 to 850,000 ounces of gold annually in its first five years of production, the company said on its website. That’s equivalent to about 11 percent of the company’s forecast output this year. The mine will also produce silver.
Barrick will work as fast as it can to satisfy the Chilean authorities and regulations, Co-Chairman John Thornton said in Toronto on May 31 after a speech by Chilean President Sebastian Pinera. The project will go forward, Thornton said.
The company paid a fine of about $12 million related to non-compliance in the construction of the water-management system in Chile and some associated reporting requirements, Andy Lloyd, a spokesman for Barrick, said in an e-mail.
To contact the reporter on this story: Liezel Hill in Toronto at firstname.lastname@example.org
To contact the editor responsible for this story: Simon Casey at email@example.com