Barrick Gold Corporation (NYSE:ABX): barred from Chile, at least for now
Chile is leaving nothing to chance and wants to ensure that Barrick Gold Corporation (NYSE:ABX) understands very clearly that the mine at Pascua Lama is positively and absolutely shut. If the gold miner wishes to commence mining operations there, the company will have to build solid infrastructure to prevent the groundwater from getting polluted.
An appeals court in Chile has formally suspended all work at the mine though this move had been anticipated by Barrick, last month. At that point, the company had announced that work at the Pascua Lama mine will be delayed far beyond the late 2014 date that had been originally forecasted.
At the start of 2013, there were a lot of clashes with the local indigenous tribes and the government. Eventually, this led to the work being suspended temporarily. Very soon, Chile’s environmental regulator said that the work could not go ahead at all. Now, based on the hard-line stance that has been underlined by an appeals court, ABX does not expect production to begin anywhere before 2016.
Pascua-Lama is one of the largest silver and gold projects in the world. If and when it is allowed to progress, it has the capacity to produce an average of 800,000-850,000 ounces of gold as well as 35 million ounces of silver within the first 5 years of operation. The mine is expected to be productive for at least 25 years and is believed to hold almost 18 million ounces of probable and proven gold reserves. It also has around 676M ounces of silver.
Nothings changing in a hurry
Last month, Barrick Gold Corporation (NYSE:ABX) has extended its production schedule further and said that it expects to write-down almost $5.5B in connection with these delays. Even though there has been sort of a recovery in gold prices from the extreme lows that that they had experienced in June, analysts don’t really expect the situation to change anytime soon.