Glacier, dust issues at Pascua Lama not tied to development work - Barrick

- Monday, February 18, 2013

Glacier, dust issues at Pascua Lama not tied to development work - Barrick

Canada's Barrick Gold (NYSE, TSX: ABX) has submitted a report to an appeals court in Chile's region III arguing that the melting of glaciers and dust issues near its Pascua Lama gold project on the Chile-Argentina border is the product of global warming, climate change and the region's unfavorable conditions, local paper La Tercera reported.

In the report, submitted in January, Barrick maintained that changes in the glaciers "are not explained by the activities being carried out by Pascua Lama, but rather are linked to several climatic, geographical and technical factors," according to La Tercera. In addition, the company believes that the shrinking of the glaciers has not affected water resources, as the glaciers' contribution to the Huasco river watershed is relatively minor.

As evidence for its position, Barrick cited several scientific studies that have identified the melting of the glaciers as an ongoing phenomenon attributable to factors other than the project's development.

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Back in October, the appeals court agreed to hear a request for an injunction filed by a group of Diaguita community organizations against the company's subsidiary, Minera Nevada, which is in charge of the US$8bn-8.5bn gold project, and the region III environmental evaluation committee.

The community members were primarily concerned with "the destruction of the Toro 1, Toro 2 and Esperanza glaciers, located next to the mining operation, and the contamination of water resources," the lawyer leading the case, Lorenzo Soto, was quoted as saying by newspaper El Mercurio at the time.

A local Barrick representative said then that the company had not committed any illicit acts that would have negatively impacted the glaciers.

Furthermore, in late October last year, the miner voluntarily halted pre-stripping due to problems related to excessive dust. Following the voluntary stoppage, Chile's geology and mining service (Sernageomin) issued an order for pre-stripping to be put on pause until health and safety issues posed by excessive dust could be dealt with - a measure that is still in place.

Barrick is also facing three sanctioning processes brought by the country's general water authority DGA, which has claimed that the company failed to comply with glacier monitoring requirements. The company has been working to make improvements in this regard, according to the La Tercera report.

The legal process against the company will resume in March, following a February recess. In addition, a more complete report from Sernageomin related to the suspension of pre-stripping is also expected that month, as is a statement from the environmental authorities on the sanctioning processes.

While production at Pascua Lama is scheduled to start in 2H14, CEO Jamie Sokalsky said during the company's recent results presentation that pre-stripping has "to be back on track by sometime late in the second quarter;" otherwise, it could begin to impact the schedule.

Once Pascua Lama is in full production, the operation will churn out 800,000-850,000oz/y of gold and 35Moz/y silver. The project has proven and probable reserves of 17.9Moz gold and 676Moz silver.

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