Barrick Gold Corp. says first production from its Pascua-Lama mining project in South America will be delayed due to work required to comply with orders from Chile's environmental regulator.
The Toronto-based miner said Monday that it will no longer be able to meet its goal of starting production at Pascua-Lama in the second half of 2014, though it emphasized that it is too early to specify a new target. On May 24, the Superintendencia del Medio Ambiente (SMA), cited "very serious violations" by Barrick and ordered the company to complete a water management system to prevent contamination around the Chilean mine.
"Barrick is unable to fully assess the impact of the SMA resolution on the capital budget, operating costs and schedule of the Pascua-Lama project at this time," the company said in a regulatory filing.
The world's largest gold producer added that while it is looking at potentially reducing expenses in the $8.5-billion (U.S.) project, "the delay beyond 2014 is expected to result in a related increase in capital cost."
While the regulator halted development of Pascua-Lama until environmental work is completed, Barrick noted that a preliminary court injunction already had suspended the project in April, owing to concerns raised by indigenous communities.
Analysts have said softening gold prices will influence Barrick's decisions on the venture, including whether to voluntarily choose to temporarily stop development.
The miner said it is fully committed to complying with the SMA's requests and operating at the highest standards, but left its options open. "Barrick will continue to evaluate all alternatives, in light of the uncertainties associated with the legal and regulatory actions, and the current commodity price environment," the company said.