TORONTO, June 4 (Reuters) - Canada’s Barrick Gold Corp said it would delay beyond 2014 the startup of its Pascua-Lama gold mine in Chile and Argentina, and as a result would likely exceed its current project budget of up to $8.5 billion.
Its shares fell 3.4 percent to C$21.22 on Tuesday morning on the Toronto Stock Exchange.
In a filing with Canadian regulators late on Monday, Barrick attributed the delay to water management work required by Chile’s environmental regulator. The miner did not make clear when it expects the controversial mine to start production or how much it now plans to spend on the development.
A Chilean court in April partially halted construction of Pascua-Lama, which straddles the border of Chile and Argentina, to weigh claims by indigenous communities that Barrick has damaged pristine glaciers and harmed water supplies.
Chile’s new environmental regulator then also halted work in May, citing serious violations, and said the company must complete a water management system in accordance with its permits before restarting the build.
The head of the regulator told Reuters last week that the water management infrastructure needs would likely take one to two years to complete.
“While the company is assessing opportunities for potential reductions in certain expenditures, the delay beyond 2014 is expected to result in a related increase in capital cost,” Barrick said in the filing.
While all nonenvironmental work is stopped in Chile, construction continues on the Argentine side of the project.
The delay is just the latest hurdle for the project, which Barrick has had on its books for more than a decade. Last year, the miner pushed back first production by a year and raised its estimate of capital costs about 70 percent.
Pascua-Lama, which Barrick expects to produce 800,000 to 850,000 ounces of gold annually over its first five years, is important to the world’s largest gold producer as it looks to replace depleted mines.
But the first bi-national mine in the world is located at very high altitudes in the Andes Mountains, where the weather is harsh and unpredictable.
Cost overruns and delays at the mine have led to some speculation that Barrick might scrap the project as part of its drive to reel in capital spending, a trend that has swept across the sector over the past year.
The company has said it is evaluating alternatives for the project in light of the legal and regulatory issues, and the current commodity price environment.
Gold prices fell sharply in April and are now trading around $1,400 per ounce, well below the $1,700 per ounce that Barrick has forecast for the year in February.
Barrick’s Toronto-listed shares have fallen more than 40 percent so far this year.