Troubled Pascua Lama gold project experiences yet another setback
Chile's mine health and safety regulator has requested a number of studies be presented for its consideration before it will allow the resumption of pre-stripping activities at Barrick's Pascua Lama.
Posted: Monday , 12 Nov 2012
RENO (MINEWEB) -
The costs and delays at the troubled Pascua Lama project--which already contributed to the dismissal of former Barrick CEO Aaron Regent--continue to mount as Chilean authorities halted construction work at portions of the project due to concerns about the health of workers at the site.
However, in a statement issued Sunday, Barrick said the order "only affects activities related to pre-stripping in Chile."
"Major construction activities on the Chilean side of the project, including work on the ore tunnel, the crusher and the camp will continue uninterrupted," Barrick said in a news release. "Construction activities in Argentina are not impacted."
"At this time, pre-stripping is not a critical path item in the construction schedule and a temporary halt is not anticipated to impact the overall project schedule or cost estimates," the company said.
The Chilean newspaper La Tercera reported that safety inspectors from Chile's National Geology and Mining Service (Sernageomin) visited Pascua Lama on October 24 and found there was an excess of fine particulates in suspension in the air.
Sermageomin allegedly found that pre-stripping is taking place at Pascua Lama. This work, along with the drilling and blasting of the mine and emptying of the material in Pascua Lama's waste dump are reportedly generating the air quality problem.
A document sent by Sernageomin to La Tercera allegedly said the condition is the result of incorrect control of the material deposited in the Northern Nevada dump which, because of its size distribution and the complex climatic conditions of the area, creates a drag of fine materials and creates the air particulate pollution.
"The health and well-being of our workforce is a priority," Barrick declared in a statement issued Sunday. "Upon halting pre-stripping activities, Barrick immediately formulated an action plan to address the regulator's specific concerns while further strengthening dust control measures at the project generally. Implementation of these measures is now underway."
During a conference call with analysts earlier this month, Barrick CEO Jamie Sokalsky told analysts that delays in the earthworks and underground for the Pascua Lama process plant were primarily responsible for a change in the shift in schedule for the project.
At the time Barrick warned that project capex costs would increase for the second time this year to $8 billion to $8.5 billion.
In July, Standard & Poor's downgraded Barrick from "A-" to "BBB+" with a negative outlook, citing higher forecasted capital spending, as well as "execution risks surrounding Pascua Lama." The credit ratings agency's negative outlook on Barrick "reflects our view that the execution risks surrounding Pascua Lama could potentially stretch the company's credit measures and free operating cash flow generation beyond the levels we have assume within our base case scenario."
Quoting Chilean Mining Minister Hernan de Solimihac, La Tercera said the suspension of the pre-stripping related activities at Pascua Lama may last for weeks. Barrick has already delayed the start-up of Pascua Lama until mid-2014.
Meanwhile, a Chilean appeals court is still considering a request for an injunction against the company and its project filed by five indigenous communities.