Barrick Gold announced in conjunction with the release of its third-quarter 2013 results that it has temporarily suspended construction activities at its cross-border Chile/Argentina Pascua-Lama gold-silver project, except activities required for environmental protection and regulatory compliance. Barrick suspended construction work on the Chilean side of the project in April to address environmental and other regulatory requirements to the satisfaction of Chilean authorities. The current decision applies to the entire project.
Barrick Gold has taken a $15.1 billion impairment charge against the suspended Pascua-Lama gold-silver operation on the Chile-Argentina border. The company said it would have to consider a number of factors before restarting construction.
“We have determined that the prudent course at this stage is to suspend the project, but naturally we will maintain our option to resume construction and finish the project when improvements to its current challenges have been attained,” Barrick President and CEO Jamie Sokalsky said.
“As a result of our previous decision to slow down and re-sequence construction, which resulted in significant demobilization over the last few months, we are in a much better position to implement this temporary suspension quickly and efficiently, with many ramp-down activities already under way.
“Our previously lowered capital cost guidance for 2014 is now expected to be further reduced by up to $1 billion, while we continue to address all our environmental and social obligations.”
Barrick’s decision to re-start will depend on improved project economics such as go-forward costs, the outlook for metal prices, and reduced uncertainty associated with legal and other regulatory requirements. Barrick will update and refine capital cost estimates and stage the project’s remaining development into distinct phases with specific work programs, budgets and objectives.
The company will also continue to explore further opportunities to improve the project’s risk-adjusted returns, such as strategic partnerships and royalty or other income streaming agreements.
Barrick took a $5.1 billion after-tax impairment charge against the Pascua-Lama project in its second-quarter financial results.
The project has nearly 18 million oz of proven and probable gold reserves, with 676 million oz of silver contained within the reserves, and an expected mine life of 25 years. Production has been planned in the range of 800,000 to 850,000 oz/y of gold in the first five years of production.
Barrick Gold produced 1.85 million oz of gold during the third quarter of 2013 at all-in sustaining costs of $916/oz.
