Barrick Gold Corporation provided an update on the status of its Pascua-Lama project, located on the border between Argentina and Chile.
As previously reported, on January 17, Chile’s Superintendencia del Medio Ambiente (SMA) ordered the closure of existing infrastructure on the Chilean side of the Pascua-Lama project.
The sanction is part of a re-evaluation process ordered by the country’s Environmental Court in 2014 and relates to historical compliance matters. Barrick is appealing the resolution on a number of grounds, including on the basis that the sanction is disproportionate to actual environmental impacts.
The resolution does not affect the Company’s ongoing evaluation of an underground, block-caving operation at Pascua-Lama, which would require additional permitting and regulatory approvals in both Argentina and Chile, irrespective of the recent SMA decision. In any underground scenario, Barrick would also close site facilities and surface disturbance in Chile not necessary for an underground mine.
In light of the SMA order to close surface facilities in Chile, and current plans to evaluate an underground mine, Barrick is reclassifying Pascua-Lama’s proven and probable gold reserves of approximately 14 million ounces, which are based on an open pit mine plan, as measured and indicated resources.1 As a result, we expect to record an estimated pre-tax impairment of $429 million at Pascua-Lama in the fourth quarter of 2017. Further details will be included in Barrick’s year-end results release on February 14, 2018.
A shift to an underground operation would address a number of community concerns by significantly reducing the overall environmental impacts of the project, as compared to an open pit operation. In addition, an underground operation would be less susceptible to weather-related production impacts during the winter season.
The Company has formed a working group with Shandong Gold to study a potential partnership at Pascua-Lama, building on our existing joint venture at the nearby Veladero mine.
We will provide a further update on the Pascua-Lama project at the Company’s February 22 Investor Day.