Chile Fines Barrick's Pascua Lama, Halts Gold Project

Markets Reuters

Chilean environmental authorities on Friday ordered Barrick Gold Corp to halt work at its massive Pascua-Lama project and fined the company $16 million, citing serious environmental violations at the site.

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A Chilean court in April had partially halted the costly $8.5 billion gold project, which straddles the border of Chile and Argentina, to weigh claims by indigenous communities that Barrick has damaged pristine glaciers and harmed water supplies.

Environmental authorities said on Friday the $16 million fine is related to a serious "breach" and four serious violations of environmental controls around the project.

Barrick, the world's largest gold producer, warned last month it would stop spending on the project if the timetable for resolving the project's regulatory problems remained unclear.

Barrick has poured about $4.8 billion into Pascua-Lama, which was expected to produce 800,000 to 850,000 ounces of gold per year in its first five years of full production. It expects to spend a total of about $8.5 billion.

The complex project, on Barrick's books for more than a decade, has encountered repeated delays in the face of political wrangling and the challenges of building a mine that is 3,800 meters (12,467 feet) to 5,200 meters (17,060 feet) above sea level.

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Shares of Barrick were halted on Friday as news emerged of the fine by the Chilean regulator.

Shares of Silver Wheaton Corp were also halted. The company has helped partially fund the project in exchange for allowing it to buy 25 percent of all the silver produced.