The fate of the Pascua-Lama project, at least the next stage of it, will be decided this month with a Chilean court rules on an attempt by indigenous groups to halt development of Barrick Gold Corp.’s $8.5-billion gold mine.

The Copiapo court of appeals temporarily halted construction of Pascua-Lama, which straddles the Chile-Argentine border high in the Andes Mountains, in April to weigh claims by the indigenous communities that the project has damaged pristine glaciers and harmed water supplies.
If the court were to rule with the indigenous groups it could lead to an indefinite suspension of the project.

“The decision will have to be issued during the month of July in any case,” Judge Antonio Ulloa said in an interview published by the northern Chilean newspaper El Diario de Atacama.

While the court’s decision will be an important one for the project, it likely won’t be the last as either side it likely to appeal the first ruling suggesting Toronto-based Barrick faces a protracted legal battle in world No. 1 copper producer Chile.

In addition to the court-ordered suspension, Chile’s environmental regulator has ordered a halt to work at the mine, citing violations, and said Barrick, the world’s biggest gold miner, must come up with a water management system that meets the requirements of its permits before restarting development.

The regulator told Reuters that the earliest the project could be reactivated is likely in one to two years.

Barrick said that it would re-sequence construction of the project to target a start of production by mid-2016, deferring some $1.5 billion to $1.8 billion of planned capital spending in 2013 and 2014.