Barrick Gold has submitted a plan, subject to review by Chilean regulatory authorities, to construct the water management system on the Chilean side of its huge Pascua-Lama gold-silver project to bring it into compliance with permit requirements by the end of 2014.
Under this scenario, ore from Chile is expected to be available for processing by mid-2016, and Barrick is extending the construction timelines for the project’s process plant and other facilities in Argentina, targeting first production by mid-2016, compared to its previous schedule of the second half of 2014.
Barrick suspended construction work on the Chilean side of the Pascua-Lama project in April to address environmental and other regulatory requirements to the satisfaction of Chilean authorities. Activities deemed necessary for environmental protection remained ongoing (E&MJ, May 2013, p. 14 and June 2013, p. 24).
A Chilean appeals court formally suspended construction of the project on July 15 until Barrick builds infrastructure that will prevent water pollution.
Re-sequencing the Pascua-Lama project will include a reduction in project staffing levels and deferral of substantial capital spending previously planned for 2013 and 2014. Barrick now expects to reduce capital expenditures across the two years by a total of $1.5 billion to $1.8 billion. For 2013, Pascua-Lama expenditures will be reduced by $700 million to $800 million to $1.8 billion to $2 billion. For 2014, they are expected to be reduced by $800 million to $1 billion to approximately $1 billion to $1.2 billion.
Barrick expects to provide an updated total capital cost estimate for the project in the third quarter of 2013, when the re-sequenced construction schedule is finalized.
Barrick also reported that it was conducting impairment testing for Pascua- Lama as a result of both the delay in first gold production and of recent significant declines in gold and silver prices. Preliminary analysis indicated an after-tax asset impairment charge in the range of $4.5 billion to $5.5 billion, the company said. A final impairment assessment was expected to be included in the company’s second quarter 2013 results release in early August.
Barrick President and CEO Jamie Sokalsky said, “When complete, Pascua-Lama will be one of the world’s great, low-cost gold mines, producing an average of 800,000 to 850,000 oz of gold per year in its first full five years of production. In light of the challenging business environment we are facing today, and taking into consideration existing construction delays, the company is advancing the project in a prudent manner by extending the construction schedule over a longer period.
“This mine has significant and strategic value for Barrick shareholders and the project’s host jurisdictions of San Juan province, Argentina and the Atacama region of Chile. We continue to work closely with the governments of both countries to ensure Pascua-Lama is on the right path to deliver value for all of our stakeholders, including shareholders, host governments and local communities.”