VANCOUVER (miningweekly.com) – Major miner Barrick Gold expects to book a pre-tax impairment in the fourth quarter ended December 31 of about $429-million at its stalled Pascua-Lama copper/gold project, which straddles the border between Chile and Argentina.
The NYSE- and TSX-listed company advised that it is reclassifying about 14-million ounces of gold in the proven and probable reserve categories back to the measured and indicated resource categories, which are not considered viable to base a mine plan on.
Barrick stopped the project in 2013 after investing $5-billion in it. In addition to permitting issues, cost overruns and a sharp drop in bullion prices, it faced strong and organised opposition by the local indigenous communities.
The Pascua-Lama openpit project was originally expected to cost no more than $3-billion when construction was approved in 2009. The cost of the project had since escalated to more than $8.5-billion.
Barrick also revealed on Tuesday that it has formed a working group with Shandong Gold to study a potential partnership at Pascua-Lama, building on its existing joint venture with Shandong at the nearby Veladero mine, in Argentina.
Meanwhile, Barrick has appealed a ruling last month by Chile's Superintendencia del Medio Ambiente (SMA), which ordered the closure of existing infrastructure on the Chilean side of the Pascua-Lama project. The sanction is part of a re-evaluation process ordered by the country's Environmental Court in 2014 and relates to historical compliance matters.
Barrick is appealing the resolution on a number of grounds, including on the basis that the sanction is disproportionate to actual environmental impacts.
Barrick advised that the resolution does not affect its ongoing evaluation of an underground, block-caving operation at Pascua-Lama, which would require additional permitting and regulatory approvals in both Argentina and Chile, irrespective of the recent SMA decision. In any underground scenario, Barrick would also close site facilities and surface disturbance in Chile not necessary for an underground mine.
The Pascua-Lama deposit is located 75% in Chile and 25% in Argentina.
Barrick believes a shift to an underground operation would address several community concerns by significantly reducing the overall environmental impacts of the project, as compared to an openpit operation. Further, an underground operation would be less susceptible to weather-related production impacts during the winter season.
The company will release its fourth-quarter and full-year financial results on February 14, and provide a further update on the Pascua-Lama project at the company's February 22 investor day.