Court Decision Stalls Barrick’s Cortez Hills

VANCOUVER — Lawyers at the Bureau of Land Management (BLM) in Nevada and Barrick Gold (ABX-T, ABX-N) are busy weighing their options following an appeals court decision ordering additional environmental assessment of Barrick’s Cortez Hills gold mine.

“We’re not to that point yet to know exactly which way we’re going to go with this,” says Nevada- based BLM spokesperson Jo-Lynn Worley. “Our Department of Justice, our lawyers, are still reviewing the decision.”

In response to a question about court timelines in light of the stinging decision, which could affect production at Cortez Hills, Barrick executive vice-president of corporate communications, Vince Borg, said in an email that it is still too early to speculate.

“It will be dependent on various legal alternatives that we, as well as the BLM, are considering,” he says.

Four groups, two environmental organizations and two Native American tribes, have been seeking an injunction against the BLM’s record of decision that gave construction of Cortez Hills a green light in 2008. In January 2009, a district court ruled in favour of Barrick and the BLM, upholding permitting of the Cortez Hills mine, which is ultimately slated to produce as much as 1 million oz. gold a year and to begin significant gold production in the first quarter of 2010.

The four groups then appealed parts of the district court’s decision and won a stunning — if tentative –reversal of that court’s opinion.

According to Barrick, the thrust of the new ruling by the appeals court is that the BLM did not adequately consider certain aspects of Cortez Hills’ environmental impact. In particular, the appeals court has ordered additional environmental review on three fronts: transport and treatment of refractory ore, mitigation plans to dewater the Cortez Hill mine and the effect of particulate emissions.

It also left it up to the district court to decide whether Barrick would have to stop mining at Cortez Hills in the interim while the BLM and Barrick conduct additional environmental studies. Barrick says that it recently began producing ore from its open pit at Cortez Hills and started to ramp up underground operations.

Though what will happen next is difficult to predict, without a doubt the appeals court decision was a sudden and hard wallop to Barrick. The day after the opinion was rendered on Dec. 3, Barrick shares plunged 9% or $4.32 to $45.10.

And while the company says it is prepared to do whatever it takes to help the BLM on any additional environmental studies, it looks like there may still be some legal wiggling room through which the BLM and Barrick may contest the court’s decision.

“I think there’s a ten-day (period) to file an appeal — so closer to that we’ll have a better idea (of how the BLM will proceed),” Worley says, adding that the appeal is more accurately called a motion for reconsideration.

Still, the court’s decision begs the question of what would happen if the BLM and Barrick did have to conduct additional environmental review of Cortez Hills. Would it, for example, reopen a period of public comment?

Though Worley deferred answering that question until after the BLM decides whether to appeal, she did say that in other cases where the BLM has revisited environmental impact statements, the process can vary. “Whether there’s a scoping or public comment period, that would probably be predicated on each individual situation,” she says.

As for Barrick, in a written statement outlining the company’s response to the appeals court decision, it said: “It is premature to predict the extent of any potential injunction impact on the timing and completion of construction of Cortez Hills, which is now largely complete. The district court will have to determine the extent to which any action, including any suspension of operations, may be required to respond to the decision of the Court of Appeals.”