More bad news for Barrick: Pascua Lama production delayed deep into 2015
Barrick Gold Corp. (ABX) announced Monday that production at its Pascua-Lama project in Chile will be delayed a year beyond the previous forecast of Q3 or Q4 2014, owing to demands from Chile's environmental agency.
The revised production start date will bring higher capital costs, bumping the project cost estimate up as high as $8.5 billion.
In April of this year the Chilean government rejected Barrick's appeal to restart work on the gold and silver project.
The decision, which affects the Chilean side of the project straddling the border with Argentina, was announced on April 10 after indigenous communities complained that Pascua Lama was threatening their water supply and polluting glaciers.
Barrick's Co-Chairman John Thornton said he is working quickly to address the concerns of the Chilean authorities, but the company also stated that it "will continue to evaluate all alternatives, in light of the uncertainties associated with the legal and regulatory actions, and the current commodity price environment.”
The production target for Pascua-Lama was 800,000 to 850,000 ounces of gold annually over the course of its first five years, "equivalent to to about 11 percent of the company’s forecast output this year."
Sources: Barrick Gold; Liezel Hill, reporting for Bloomberg; The Globe and Mail; University of Chile radio