Chile’s top court backs Barrick in Pascua Lama water case

Chile’s Supreme Court handed another small victory to Barrick Gold (TSX: ABX; NYSE: GOLD) after rejecting an appeal by a local indigenous community asking for a revision of the water quality baseline in the area where the company’s halted Pascua-Lama gold-silver project is located.

The ruling confirms previous official reports determining that the Estrecho River’s surface water quality had varied substantially in relation to what was originally projected in Pascua-Lama’s Environmental Qualification Resolution (RCA) due to natural phenomenon, La Tercera newspaper reported.

While the decision discards the Diaguita Patay community allegations of pollution, it doesn’t pave the way for Barrick to reopen the long-stalled project, which has been shuttered since 2013.

At the time, a court ordered the gold giant to halt construction over environmental concerns. Barrick shelved the project straddling the border with Argentina later that year, citing massive cost overruns and nose-diving metal prices.

Pascua-Lama is facing additional legal challenges. Barrick is still waiting for a decision on its request to an environmental court to reverse a permanent closure order from Chile’s environmental regulator SMA.

The original mine plan for Pascua-Lama, which required a capital outlay in excess of US$8 billion, contemplated an open-pit operation that would have had an effect on three small glaciers in the Chilean side of the Andes. It also involved major construction in the area and huge waste dumps.

In 2016, Barrick began a “drastic revision” of the project and agreed to pay US$140 million to resolve a U.S. class-action lawsuit that accused it of distorting facts related to the controversial project.

Shortly after, Barrick abandoned the idea of an open pit at the site, saying it plans to mine underground instead.

In April 2017, it sold a 50% stake in its Veladero mine in Argentina to Shandong Gold Group in a transaction worth US$960 million. As part of that deal, which made the two firms strategic partners, the Shandong province-based gold miner committed to help Barrick move forward with Pascua Lama.

Later the same year, the company agreed to pay a further US$20 million to a Chilean group in order to settle an arbitration case against the company filed last year after the gold producer halted payments settled in 2005.

Argentina has been an enthusiastic supporter of the project – while only around a fifth of the deposit is located in that country, many of the above-ground facilities will be built on that side of the border.

Barrick has said it may partner on that project with Shandong Gold Group of China, building on their existing joint venture at the nearby Veladero mine.

If it ever comes into production, Pascua-Lama would generate about 800,000 to 850,000 ounces of gold and 35 million ounces of silver per year in the first full five years of its 25-year life.

This article first appeared in our sister publication, Mining.com. https://www.mining.com/chiles-top-court-backs-barrick-in-pascua-lama-water-case/