June 5 (Reuters) - Barrick Gold Corp plans to give Chilean regulators a water management plan for its delayed Pascua-Lama mine “imminently”, and says the project will be one of its key assets once production finally starts.
But the world’s largest gold producer said on Wednesday it could not yet say what impact implementing the water plan would have on the timing and cost of the project, which is slated to produce 800,000 to 850,000 ounces of gold and 35 million ounces of silver a year in its first five years.
“Until this plan is approved, we can’t establish a definitive time frame,” Chief Financial Officer Ammar Al-Joundi said at the Credit Suisse Canadian Precious Metals Conference.
“Once we have that, then we will be able to take a look at the overall project, take a look at the impact on scheduling and costs and everything else.”
A Chilean court ruling in early April partially halted construction at Pascua-Lama, which straddles the border between Chile and Argentina, amid claims that Barrick, the world’s largest gold producer, has damaged glaciers and water supplies.
In May, Chile’s environmental regulator fined Barrick nearly $16 million and ordered it to complete a water management system in accordance with its permits before restarting construction.
That will delay the start-up of Pascua-Lama past 2014 and will likely impact the cost of building the massive mine, which is already budgeted at $8.5 billion. Barrick has so far spent around $5 billion on the development.
The delay is just the latest hurdle for the project, which Barrick has had on its books for more than a decade. Last year, the miner pushed back first production by a year to 2014 and raised its estimate of capital costs by about 70 percent.
Pascua-Lama is located at very high altitudes in the Andes, where the weather is harsh and unpredictable and working conditions are difficult. It is the first bi-national mine in the world, adding a new layer of regulatory challenges.
The string of budget overruns, delays and other obstacles have led some to speculate that Barrick could scrap the project as it focuses on disciplined spending.
But Al-Joundi said that Pascua-Lama will be one of the miner’s “key assets” once it is completed and he played up the project’s strengths, including gold production of more than 800,000 ounces a year and low cash costs.
He said Barrick is fully committed to complying with Chile’s regulators and will “submit that plan imminently”.
It is unclear how long Chilean authorities will take to review and approve Barrick’s management plan. The head of the environmental regulator told Reuters last week that Barrick’s water management infrastructure needs would likely take one to two years to complete.
Barrick is still doing construction and development work on the Argentine side of the project, where the processing plant and tailings storage facility are located.
The company’s shares were up 1.3 percent at C$21.86 on Wednesday on the Toronto Stock Exchange. The stock has fallen more than 38 percent this year, weighed down by the issues at Pascua-Lama and a sharp drop in gold prices.