Canada’s Barrick Gold (NYSE, TSX: ABX) will invest about $2 billion into Argentina next year mainly to advance construction at its massive Pascua-Lama gold-silver project that straddles the border with Chile, reports local newspaper Cronista.com.
At the Scotiabank GBM Mining Conference 2012 in Toronto, Barrick said that from the amount allocated to the South American country, $1.8 billion will be spent on Lama.
It also said that over $600 million will be used to boost production at its Veladero gold mine, located in the province of San Juan Province, immediately to the south of Pascua-Lama.
Barrick, the globe's top gold producer, has already sunk $2.8 billion into the ambitious project and in July announced a 50-60% cost blow-out for the mine which could end up with a final bill of as much as $8 billion.
The miner also delayed start-up of the mine to mid-2014 saying "the challenges of building a project of this scale and complexity were greater than we anticipated".
Pascua-Lama will be one of the world’s largest, lowest cost gold mines. It will also be one of the highest altitude operations in the globe at between 3,800 and 5,200 meters above sea level.
But getting to that point has proven difficult for Barrick and not only because it ran into massive escalation in capital costs and delays.
In early October, a Chilean appeals court accepted to consider a request for an injunction against the company and its project, filed by a group of northern natives in conjunction with the local government’s environmental evaluation committee.
The decision was based on studies that outline the destruction of three glaciers close to Pascua Lama: Toro 1, Toro 2 and Esperanza. The reports also show that water resources may be polluted as a result of the project.
The same month Chile’s Supreme Court struck down the planned 2,100-megawatt, $5 billion Castilla thermoelectric power plant project, citing environmental concerns. Barrick’s Pascua Lama mine was to be supplied with power from that project, which may result in additional delays and costs.
Pascua-Lama is set produce 800,000 – 850,000 ounces of gold and 35 million ounces of silver in the first full five years of its 25-year life.
Gold prices fell 2% Wednesday to $1,710, their biggest one-day drop in three weeks. Spot gold hit a low of $1,705.64 an ounce and was down $32 (1.8%) to $1,709.56 an ounce at 14:56 GMT on the Comex division of the New York Mercantile Exchange.