Barrick backs Pascua-Lama despite $5bn charge

Canadian Barrick Gold Corp (TSX, NYSE: ABX) will continue to bet on its $8.5bn Pascua-Lama mine, straddling the border of Chile and Argentina, despite the $5.1bn impairment charge on the project announced yesterday as part of the miner’s second quarter results.

The world’s top gold producer’s president and CEO, Jamie Sokalsky, said in a call conference that the company is working diligently with Chilean authorities to meet their demands and bring construction forward.

Work at the Chilean side of the Pascua-Lama project has been halted since April, with an appeals court officially declaring it on hold last month.

“The company has submitted a compliance plan for approval by Chilean regulatory authorities to complete the water-management system by the end of 2014, subject to regulatory approval of specific permit applications,” Barrick said.

“Following completion of the water management system to the satisfaction of the SMA (Chile's environmental watchdog), we expect to be in a position to resume construction in Chile, including pre-stripping. Under this scenario, ore from Chile is expected to be available for processing by mid-2016.”

The Toronto-based miner did not rule out the possibility of partnering with another company or a government to help finance the project.

Pascua Lama, which would produce about 800,000 to 850,000 ounces of gold a year in the first full five years of its 25 year life, was scheduled to start production in the second half of 2014. The mine is set to become one of the top gold and silver mines in Chile, the world's top copper producer.

Image courtesy of Barrick Gold