TORONTO, (Reuters) – Canada’s Barrick Gold Corp said it would delay the startup of its Pascua-Lama gold mine in Chile and Argentina past late 2014 and that the project would probably exceed its current budget of up to $8.5 billion as a result.
In a filing late with Canadian regulators late on Monday, Barrick attributed the delay to water management work required by Chile’s new environmental regulator.
A Chilean court in April partially halted construction of the project, which straddles the border between Chile and Argentina, to weigh claims by indigenous communities that Barrick has damaged pristine glaciers and harmed water supplies.
Chile’s environmental regulator then put its own halt on work at the gold-silver project in May, citing serious violations.
“While the company is assessing opportunities for potential reductions in certain expenditures, the delay beyond 2014 is expected to result in a related increase in capital cost,” Barrick said in the filing.
While all nonenvironmental work is halted in Chile, construction continues on the Argentine side of the project. The delay is just the latest hurdle for the project, which Barrick has had on its books for more than decade. Last year, the miner pushed back first production by a year and raised its estimate of capital costs by about 70 percent.
Pascua-Lama, which Barrick expects to produce 800,000 to 850,000 ounces of gold annually over its first five years, is important to the world’s largest gold producer as it looks replace depleted mines.
But the world’s first bi-national mine is located at very high altitudes in the Andes mountains, where the weather is harsh and unpredictable.
Barrick’s U.S.-traded shares were down 2.4 percent at $20.89 in trading before the market opened. The company’s Canadian stock has fallen more than 30 percent so far this year.
The cost overruns and delays at the mine have led to some speculation that Barrick might scrap the project as part of its drive to reel in capital spending, a trend that has swept across the sector over the past year.
The company said it “will continue to evaluate all alternatives, in light of the uncertainties associated with the legal and regulatory actions, and the current commodity price environment.”
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