July 15, 2013 / 5:16 PM / 4 years ago

Chile court keeps freeze on Barrick's Pascua-Lama mine

SANTIAGO (Reuters) - A Chilean appeals court on Monday renewed its suspension of Barrick Gold Corp's (ABX.TO)(ABX.N) controversial $8.5 billion Pascua-Lama gold mine until the company builds infrastructure that will prevent water pollution.

In April, the Copiapo Court of Appeals temporarily froze construction of the project, which straddles the Chile-Argentine border high in the Andes, while it examined claims by indigenous communities that it has damaged pristine glaciers and harmed water supplies.

On Monday, the court said it was maintaining the freeze on construction of the project until all measures required in the government's environmental license for adequate water management, "as well as urgent and transitory measures required by the environmental regulator," are adopted.

Chile's environmental regulator has also suspended Pascua-Lama, citing major environmental violations, and asked Barrick, the world's top gold miner, to build water management canals and drainage systems. Barrick has said it is fully committed to complying with all aspects of the regulator's order.

The court ruling also called for all data on nearby glaciers to be presented to the regulator.

Analysts said the Toronto-based miner will likely appeal the ruling to the supreme court, setting the stage for a protracted legal battle in mining powerhouse Chile.

The regulator has told Reuters the earliest the project could be reactivated is one to two years.

Barrick said last month it is slowing construction at Pascua-Lama as it looks to rein in spending on the severely delayed project, already billions of dollars over budget.

Pascua-Lama was forecast to produce 800,000 ounces to 850,000 ounces of gold per year in its first five years of full production.

Barrick's U.S.-traded shares rose 1.2 percent to $15.12 on Monday.

Reporting by Erik Lopez; Writing by Alexandra Ulmer; Editing by Jeffrey Benkoe

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