TORONTO (miningweekly.com) – Barrick Gold, the world's biggest gold miner, has approved the start of construction for its huge Pascua Lama gold/silver mine, on the border of Chile and Argentina.

The mine is expected to cost between $2,8-billion and $3-billion, with first production targeted for early 2013.

"We are building Pascua Lama - one of the world's best undeveloped gold mining projects," Barrick CEO Aaron Regent said in a statement on Thursday morning.

During the first five full years of operation, the mine will produce about 750 000 to 800 000 oz of gold and 35-million ounces of silver.

Total cash costs are forecast at between $20/oz and $50/oz of gold, net of silver credits, which would make Pascua-Lama one of the lowest-cost gold producing mines in the world.

Pascua Lama contains 17,8-million ounces of gold reserves, containing 718-million ounces of silver, making it also one of the biggest deposits in the world.

Development of the asset has been held up by permitting delays and a dispute between Chile and Argentina over crossborder taxes, but Chile announced last week that it had reached a deal with its neighbour to resolve the taxation issue.

Barrick said it has also received key construction permits and environmental approvals, and is in talks with lenders for project financing for the mine, with a goal of securing $1-billion from export credit agencies and global financial institutions.

"The combination of the project's attractive economics, significant production at low cash costs, and support by the governments of Chile and Argentina for this environmentally responsible project will generate enduring and substantial benefits for all concerned," Regent said.

Earlier this week, Barrick poured the first gold at its newest mine, the Buzwagi operation, in Tanzania, and is building two others: the $500-million Cortez Hills mine, in Nevada, which will start up in 2010, followed a year later by the first production at Pueblo Viejo, in the Dominican Republic.

Together with Pascua Lama, these new operations are all expected to lower the gold giant's overall cost of production, to ensure that Barrick is able to widen margins and take advantage of higher gold prices.

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