Barrick talking to new Chile minister to restart Pascua-Lama
Top gold miner Barrick Gold (NYSE:ABX TSE:ABX) has met with officials from Chile's mining ministry last week in an effort to restart construction of its troubled Pascua Lama project in South America.
Barrick gold stopped construction of Pascua Lama in October as part of its debt-reduction program and after fierce opposition from local communities and environmental groups.
The Toronto-based miner has already spent $5 billion on the project which straddles the Chilean-Argentinian border which could have a final bill in excess of $8.5 billion after a series of cost overruns.
Chile's new mines minister Aurora Williams, who was appointed in March after President Michele Bachelet assumed power told Reuters in her first interview with a foreign news organization:
"They’ve showed us their interest in solving Pascua-Lama’s problems and doing community work, which to us appears correct … What I understand is that there’s interest that the project continue."
The technically and politically challenging project high in the Andes launched in 2006 (at the time initial capex costs were pegged at $1.5 billion) suffered a number of defeats in Chilean courts about water use and the impact on glaciers in the area.
Argentina has been a vigorous backer of the project. While only around a fifth of the deposit is located in Argentina many of the above-ground facilities will be built on that side of the border. Barrick recently laid off 1,500 of the 5,000 workers on the Argentinian side.
If it goes into production the mine is expected to produce about 800,000 to 850,000 ounces of gold and 35 million ounces of silver in the first five years of its 25 year life.
Barrick is spending $300 million this year to mothball the project, but Pascua Lama has a long history that dates back to the mid-1990s.
Pascua Lama is also the subject of a class action lawsuit filed last month on behalf of investors who acquired Barrick stock between May 7, 2009 and May 23, 2013.
Shares in the $21.3 billion company lost 44% of its value over that time period, with a large chunk of the losses coming in April and May last year when the Toronto-based firm tapped markets for $3 billion to pay down debts.
The class actions allege that Barrick Gold shareholders lost billions of dollars as a result of Barrick’s "misrepresentations and failures" regarding the stalled project.
Shares in Barrick in Toronto was trading sideways on Tuesday and is down slightly so far this year.