Barrick's Pascua-Lama costs rise again, shares dive
By Julie Gordon
(Reuters) - Barrick Gold Corp (ABX.TO: Quote) reported a sharp drop in third-quarter profit on Thursday and again increased its cost estimate to build the massive Pascua-Lama mine, pushing back the date when production at the project will begin.
Shares of the world's top gold miner dropped more than 9 percent after Barrick delayed the mine's start date to the second half of 2014 from a previous target of mid 2014.
The cost of building the mine located high in the Andes mountains on the border between Chile and Argentina rose to between $8 billion and $8.5 billion from an earlier estimate of $7.5 billion to $8 billion.
The company blamed the increase on delays and higher labor and project-management costs.
This is the second time Barrick has boosted its cost estimate. Three months ago it raised the Pascua-Lama budget by 50 to 60 percent from a previous estimate of $4.7 billion to $5 billion.
The high-altitude project has proved more challenging than Barrick anticipated as the harsh climate and cross-border negotiations with the Chilean and Argentine governments repeatedly held up the pace of development over the last decade.
Once complete, Pascua-Lama will be one of the largest and lowest-cost gold mines in the world.
In June, Jamie Sokalsky, the company's long-time chief financial officer, replaced Aaron Regent as chief executive and said he would take a more disciplined approach to spending. Continued...