Barrick considers suspending Pascua-Lama project
It has certainly been a challenging few weeks for Barrick Gold, the world’s largest gold mining company.
Uncertain commodity prices coupled with an order from a Chilean court to halt construction at its $8.5 billion Pascua-Lama project (ME, April 10) has led the company to consider suspending the project.
“The company will continue to evaluate all alternatives, in light of the uncertainties associated with the legal and regulatory actions, and the current commodity price environment, including the possibility of suspending the project,” Barrick said in its first-quarter earnings report.
The Pascua-Lama project, which is set between Chile and Argentina, is already billions of dollars over budget and facing delays of at least a year, The Globe and Mail reported.
“The company is at an early stage of evaluating an alternative development plan that involves accelerating the development of another smaller pit in Argentina in order to provide a source of ore for initial production,” Barrick said. “Therefore, if resumption of construction activities in Chile, including the prestripping, is delayed beyond late 2013, or if such development alternative is determined not to be feasible, there could be a significant change to the mine plan and an impact on the capital cost and production schedule of the project.”
In the past year Barrick has replaced its chief executive officer, suffered multibillion-dollar cost overruns and equally large writedowns and a long delay in building an ambitious gold project at the height of the southern Andes mountain range.
One of its few good news stories of the year, the completion of the $3.7-billion Pueblo Viejo gold mine in Dominican Republic, has been marred in uncertainty after the impoverished Caribbean country demanded a greater share of mine profits. And in Chile, work on Barrick’s massive Pascua-Lama project, slated to be one of the world's largest gold and silver mines, has been halted amid allegations the project is polluting precious groundwater and rivers in the Atacama desert region.
Barrick said first quarter profit fell 22 per cent amid lower gold and copper prices and higher costs.
The miner said profit for the quarter ended March 31 was $847-million (US), or 85 cents a share, compared to $1.06-billion, or $1.04 per share in the year-ago period. Adjusted net earnings were $923-million, or 92 cents a share, compared to $1.10-billion, or $1.10 per share, beating the average estimate of analysts polled by Bloomberg.