Construction of Barrick Gold’s Pascua-Lama Mine has been delayed again, this time by Barrick Gold which made the move because of the falling price of gold.
The opening of the mine, the company’s largest investment, has been put back almost two years, and is now scheduled to begin producing ore in mid-2016, the Financial Times reported.
Barrick said initial analysis suggested that it would take an after-tax asset impairment charge of up to $5 billion in the second quarter for the project, and that it was reviewing the price of its other assets.
Construction of the mine that is on the border between Chile and Argentina was suspended in April by a Chilean court because of concerns raised by indigenous communities near the site.
Near the end of June the price of gold touched a three-year low of $1,180/oz, causing more trouble for the project. The cost of the mine had risen from an estimated $ 3billion at the start of the project to more than $8 billionn. The Canadian company is also awaiting a court ruling on an action brought by indigenous communities seeking suspension of the project due to environmental concerns.
Barrick says it will reduce staff levels at Pascua-Lama and defer capital spending at the mine, which it hopes will produce an average of up to 850,000 oz of gold a year in its first five years of operation.
“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,” said Jamie Sokalsky, chief executive officer.