Thursday, April 25th 2013 - 22:39 UTC

Barrick Gold considering suspension of 8.5bn mine development in the Andes

Canada’s Barrick Gold Corp making a painful adjustment to a sustained slump in bullion prices, reported progress in controlling costs and said it planned further cuts in capital spending.

Slump in bullion prices and Chilean courts are threatening the project’s costs

The world's No. 1 gold producer said it may suspend development at Pascua-Lama, its newest gold mine, located high in the Andes Mountains. A Chilean court has halted some work at the project, which straddles the border of Chile and Argentina.

The Toronto-based miner warned on Pascua-Lama as it reported an 18% drop in first-quarter profit. The decline, attributed to a slump in gold and copper prices and volumes, was not as severe as analysts had expected.

Speaking at Barrick's annual general meeting in Toronto, Chief Executive Jamie Sokalsky said the company could stop spending on Pascua-Lama if the timetable for resolving regulatory issues at the project remains unclear.

“We're serious about disciplined capital allocation,” he said. “That means we need to consider all options, including the possibility of suspending the project.”

Sokalsky later told analysts on a conference call that he expects to have more clarity on a decision in “weeks or months, as opposed to much longer than that.”

Credit rating agency Moody's downgraded Barrick's senior unsecured ratings to Baa2 from Baa1, citing the challenges the miner faces at its Pascua-Lama project and the uncertainty as to when and how the regulatory issues may be resolved.

A local court suspended work on the Chilean side of Pascua-Lama earlier this month to allow time to weigh community claims the development is destroying glaciers and harming the water supply.

Barrick gave no update on estimated costs on Wednesday or on the development timetable for the 8.5 billion dollars project. It said it was evaluating its options, including a plan to develop only a smaller pit on the Argentine side for initial production. If that proves infeasible, it said the mine plan could change, affecting costs and the production schedule.

Barrick has so far poured 4.8 billion dollars into Pascua-Lama, which is expected to produce 800,000 to 850,000 ounces of gold a year in its first five years of full production.

19 comments Feed

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1 Chicureo (#) Apr 26th, 2013 - 12:29 am Report abuse
Good! I'm pro-mining, but I'm glad this environmental monster is being delayed.
2 John Troll the 3rd (#) Apr 26th, 2013 - 02:08 am Report abuse
HAHAHAHAHA, so this is good to halt, but when the mining project is in Argentina then it is because we are soo bad.

You people are trully pathetic.
3 Think (#) Apr 26th, 2013 - 05:04 am Report abuse
Hidroaysen next, pleeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeease!
4 Condorito (#) Apr 26th, 2013 - 12:48 pm Report abuse
I am not so happy. It is a big employer in my area and I am not convinced it is an environmental monster. Barrick mined El Indio at the top of the Elqui Valley for 20 years and did so very responsibly. Neither agriculture nor tourism was affected. At Pascua-drama they seem to be doing the same. The injunction that has stopped work has been made on behalf of the “Diaguita” community on very spurious grounds.

It’s all over as soon as Mami is back. On future single-malt-re-supply treks you might be greeted by the buzz of the overhead electric highway. But the air will have that much less CO2 in it.
5 Think (#) Apr 26th, 2013 - 02:35 pm Report abuse
(4) Don’t tease, hermanito Shileno….
Some huaso aparecido de Til-Til could get angry at those towers…..
6 Condorito (#) Apr 26th, 2013 - 03:05 pm Report abuse
Ché Think:

Don’t worry, in the blink of an eye Mami would slap anti-terrorism special powers on said angry Huaso.

What is your objection to HidroAysen?

a) The visual sore of the towers
b) The altered eco-system due to flooding
c) You have an undeclared interest in the shipping of millions of tonnes of hydrocarbons in to Chile.
d) Regional development in Aysen thwarts Argentine territorial aspirations ;)

If (a), would underground power lines make a difference?
7 Chicureo (#) Apr 26th, 2013 - 04:10 pm Report abuse
Read the second to last comment in the Emol article. Who knows what damage will be caused by moving a glacier? We need more careful evaluation.
There is a lot of misinformation and normally the environmentalists are at fault, but this time I tend to agree with some of their concerns.
Hydro: The towers don't really bother me, and hydroelectric reservoirs make sense. This project however was terribly planned and was approved only because of greed. Mami now has to face what she helped create. This will be interesting...
As far as power, we may have to again consider our whole national strategy.
8 Think (#) Apr 26th, 2013 - 04:51 pm Report abuse
(6) Condorito

A) Underground power lines should be the only legal option available......
Construction of aerial lines have been abandoned decades ago by all advanced Nations..... Why do you “Think” that happened?

B) There are dozens of novel methods to harness hidroelectric power from our rivers. Most of them more cost-effective that damming (damning) them......
Here just one of them…
Construction of big damming projects have been abandoned decades ago by all advanced Nations..... Why do you “Think” that happened?

C) No C
D) No D

(7) Chicureo
A link from a website in Esquel, Chubut that may interest you...
9 Chicureo (#) Apr 26th, 2013 - 07:51 pm Report abuse
Estimado Think,
Thanks for the links. When you fly over the Atacama you see excavations everywhere, dating back to the Inca empire. Mining is the heart of our economy.
An underground line paralleling the Ruta 5 makes sense, but costly and complicated. Much of the length however would require above ground towers.
Although I'm against conventional nuclear power, this type of generation may prove to be the best way to go in the future. Bill Gates is a major backer.
10 agent999 (#) Apr 26th, 2013 - 08:17 pm Report abuse
8 Think

“Construction of aerial lines have been abandoned decades ago by all advanced Nations....”

Unfortunately your statement is not true for many reasons.
11 Ernie4001 (#) Apr 27th, 2013 - 12:05 am Report abuse
Chile already doesn´t need that kind of enviromental destructive investment, so is a very good news. Maybe these guys (Barrick)can go somewhere else to destroy glaciers but not in Chile.
12 The Chilean perspective (#) Apr 27th, 2013 - 10:55 am Report abuse
To make an omelet you gotta break some eggs, right?
Well to advance economically we have to dig stuff up, maybe remove the occasional glacier (we have plenty more). We have to damn as many rivers as economically feasible to produce cheap renewable electricity to reduce the endless imports of hydrocarbons and we have to have a cheap but efficient overhead power grid 100 mts wide x the whole length of Chile.
So to the Indians that have stopped the Pascua Lama project I have to say please think of the nation first, of those millions making a lousy US$600 bucks per month, struggling to raise their families..... PROGRESS IS WHAT WE NEED all else can take a back seat, we cannot waste a millisecond, economic progress must be utterly relentless till we reach our goals.
I'll get off my soap box now, saludos.
13 Think (#) Apr 27th, 2013 - 11:54 am Report abuse
(12) The Chilean perspective

You say...:
“To make an omelet you gotta break some eggs, right?”

I say....:
One of the favourite phrases of the “Global Momios”......
Except that our Earth is not an “Omelet”....
And our rivers are not “some eggs”....
14 The Chilean perspective (#) Apr 27th, 2013 - 12:04 pm Report abuse
13 Think
You know what I meant. Now go and hug a tree while we burn endless tons of imported coal to power my computer.
15 Think (#) Apr 27th, 2013 - 12:59 pm Report abuse
(14) The Chilean perspective

Yes, I know what you mean.....

You mean that you prefer to kill our rivers and cut Patagonia in two instead of even considering other rentable and realistic alternatives of producing electricity.
Just to “maximize the profits of the shareholders”......

This message has been send from a locally assembled computer run on 100% photovoltaic power.......
16 agent999 (#) Apr 27th, 2013 - 02:18 pm Report abuse
And with no doubt locally manufactured parts!
17 Pirat-Hunter (#) Apr 27th, 2013 - 06:14 pm Report abuse
Water is more important than gold. Natives in Canada as well beach goers in Toronto Canada know this too well, Stupid is as stupid does.
18 Ernie4001 (#) Apr 27th, 2013 - 07:00 pm Report abuse
Some could is a mal glacier, but one small here and another there and then no glaciers anywhere. And the bad called development ends with the populations forced to move into big cities living in poor suburbs and the mining companies full of money. Thanks to many that think that development means to destroy enviroment. Chile has deserve more, development is not gonna come devastating the soil. It will for other means.
19 Think (#) Apr 28th, 2013 - 01:43 pm Report abuse
Photoshopped reality.....

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