Chile’s Supreme Court has handed another small
victory for Barrick Gold (TSX:ABX) (NYSE:GOLD) after rejecting an
appeal by a local indigenous community asking for a revision of the water quality
baseline in the area where the company’s halted Pascua-Lama gold-silver project
is located.
The ruling confirms previous official reports determining that the Estrecho River’s surface water quality had varied substantially in relation to what was originally projected in Pascua-Lama’s Environmental Qualification Resolution (RCA) due to natural phenomenon, La Tercera newspaper reported.
While the decision discards the Diaguita Patay community allegations of pollution, it doesn’t pave the way for Barrick to reopen the long-stalled project, which has been shuttered since 2013.
Ruling doesn’t pave the way for Barrick to reopen the long-stalled project, which has been shuttered since 2013.
At the time, a court ordered the gold giant to halt construction over environmental concerns. Barrick shelved the project straddling the border with Argentina later that year, citing massive cost overruns and nose-diving metal prices.
Pascua-Lama is facing additional legal challenges, including a pending decision on Barrick’s request to an environmental court to reverse an order from Chile’s environmental regulator SMA ordering the project’s permanent closure.
The original mine plan for Pascua-Lama, which required
a capital outlay in excess of $8 billion, contemplated an open-pit operation
that would have had an effect on three small glaciers in the Chilean side of
the Andes. It also involved major construction in the area and huge
waste dumps.
In 2016, Barrick began a “drastic revision” of the project and agreed to pay $140 million to resolve a US class-action lawsuit that accused it of distorting facts related to the controversial project.
Shortly after, Barrick abandoned the idea of an open pit at the site, saying it plans to mine underground instead.
Ahead with the Lama portion
In April 2017, it sold a 50% stake in its Veladero mine in
Argentina to Shandong Gold Group in a transaction worth $960 million. As part
of that deal, which made the two firms strategic partners, the Shandong province-based
gold miner committed to help Barrick move forward with Pascua Lama.
Later the same year, the company agreed to pay a further $20 million to a Chilean group in order to settle an arbitration case against the company filed last year after the gold producer halted payments settled in 2005.
Argentina has been an enthusiastic supporter of the project – while only
around a fifth of the deposit is located in that country, many of the
above-ground facilities will be built on that side of the border.
Barrick has said it may partner on that project with
Shandong Gold Group of China, building on their existing joint venture at the
nearby Veladero mine.
If it ever comes into production, Pascua-Lama would generate
about 800,000 to 850,000 ounces of gold and 35 million ounces of silver
per year in the first full five years of its 25-year life.