Chile's Supreme Court begins hearings on Barrick Gold’s appeal to $16m fine

Chile's Supreme Court begins hearings on Barrick Gold’s appeal to $16m fine

Construction at Pascua Lama, which straddles the Chile-Argentina border, has been indefinitely postponed due to legal issues in Chile and Barrick's own decision to halt works in October.

Chile's Supreme Court is due Tuesday to begin hearing an appeal filed by Canadian miner Barrick Gold (NYSE, TSX: ABX) against the environmental watchdog over a US$16 million fine it imposed last year for several permit breaches at the now shelved Pascua Lama gold-silver project.

The appeal follows a confusing ruling in March this year that revoked the penalty — the largest ever imposed in the country— over alleged mishandling of the process by the regulator, the Superintendence for the Environment (SMA).

The resolution, however, not only ordered the Toronto-based to keep Pascua Lama’s operations halted, but instructed the SMA to re-write the resolution containing the fine, as it said it contained a number of "errors and illegalities."

The move brought new challenges and the possibility of even higher fines for Barrick, which insists the process leading to the multimillion fine was conducted according to law, El Pulso (in Spanish) reports.

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 this year.

However, construction at the project site, which straddles the Chile-Argentina border, has been indefinitely postponed because of legal issues in Chile and the company's own decision to halt works in October, after investing $5 billion in it.

The mine was set to become one of the top gold and silver mines in Chile, the world's No.1 copper producer.