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Energy and Resources Barrick Gold to incur $429-million charge at troubled Pascua-Lama project

A general view of the construction at Barrick Gold's gold processing plant at the Pacua-Lama mine in Argentina on May 8, 2013.

Barrick via Reuters

Barrick Gold Corp. says it will incur a pre-tax charge of $429-million in its upcoming fourth-quarter results as a result of downgrading a portion of its gold reserves at its troubled Pascua-Lama project.

In a release late Tuesday, Barrick said roughly 14 million ounces of gold at Pascua-Lama in South America will now be classified as "measured and indicated," as opposed to "proven and probable."

Measured and indicated is a less certain category of gold reserves than proven and probable.

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Barrick says reclassification of reserves is necessary following a decision last month by Chile's environmental regulator that ruled the Toronto-based miner must shut down the Chilean portion of its above-ground operations at Pascua-Lama.

The massive gold and silver project is situated in the Andes and straddles the border between Chile and Argentina. Barrick, the world's biggest gold company by production, spent years and billions of dollars attempting to build a conventional above-ground open-pit mine at the site. But in 2013, Chile's Superintendence of the Environment (SMA) ordered Barrick to halt construction of the mine, with the regulator objecting to its water-management system.

For some time now, Barrick has been exploring the possibility of restarting the suspended project by building an underground mine on the Argentinian side, which may be less detrimental to the environment. The company has said it may partner on the project with Shandong Gold Group of China.

Seeing Pascua-Lama through to eventual production is one of the keys to addressing declining production at Barrick. According to preliminary numbers, the company's production fell last year to 5.3 million ounces of gold, down from 5.5 million ounces in 2016.

Barrick is due to release its year-end results on Feb. 14, and says it will update investors on Pascua-Lama during its investor day on Feb 22.

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