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Toronto-based Barrick Gold (NYSE, TSX: ABX) has decided to temporarily suspend construction at its US$8.5bn Pascua Lama project straddling the Chile-Argentina border, the company said while announcing its third quarter results.
Construction was already halted on the Chile side following a string of legal cases filed against the project related to environmental and water issues, but work was continuing on the Argentine side. That will now be put on hold, although work required for environmental protection and regulatory compliance in Chile will continue, Barrick said.
The project has been accused of damaging nearby glaciers, which are a source of local water supply, among other things.
Suspension of construction at Pascua Lama will reduce Barrick's 2014 capital costs by up to US$1bn, the company said.
"We have determined that the prudent course - at this stage - is to suspend the project, but naturally we will maintain our option to resume construction and finish the project when improvements to its current challenges have been attained," CEO Jamie Sokalsky said.
The troubled project has been in the works for well over a decade during which time cost estimates have risen some ten-fold. Pascua Lama is one of the world's largest gold projects with 18Moz of proven and probable reserves of gold and 676Moz of silver.
THIRD QUARTER RESULTS
Barrick, the world's largest gold producer, reported Q3 net earnings of US$172mn before adjustments, down 73.5% from US$649mn a year ago, on revenues of US$2.99bn compared to US$3.40bn. Gold production in the quarter came in at 1.85Moz compared to 1.78Moz a year ago. The 3Q12 figures are restated.