TORONTO, Sept 1 (Reuters) - Barrick Gold Corp, the world’s largest gold miner, said Thursday it has brought back a former executive to advance a scaled-back development plan for its suspended Pascua-Lama project that will first focus on Argentina.
The gold and silver project, which straddles the border of Argentina and Chile in the Andes Mountains, was put on hold in 2013 due to environmental issues, political opposition, labor unrest and development costs that ballooned to $8.5 billion.
George Bee, who has 16 years experience at Barrick and was most recently Chief Executive at Jaguar Mining, will work on a modest ‘starter’ option for a phased development plan, the company said.
Gold miners are increasingly doing “bite-sized” developments that carry less risk of budget disasters and fewer of the political and environmental disputes that have derailed mega-mines in recent years.
Recent evaluation work indicates that a scalable underground mine plan at Lama may be the best option for a phased approach, Barrick said.
If successful, cash flow from Argentine operations could fund additional development “over time” on both sides of the border. Barrick said its Chilean unit was working to resolve legal, regulatory and permitting issues there.
Later, Bee will develop an integrated development plan for Barrick’s Frontera district on the El Indio belt.
“We view the announcement as a positive for the shares as we believe that a phased development plan for Pascua-Lama would have the greatest potential to create shareholder value,” RBC Capital Markets analyst Stephen Walker said in a note to clients.
“It would also provide sufficient technical and economic information to maximize an earn-in contribution by any potential JV (joint venture) partner.”
Bee, named senior vice president for Lama and Frontera District development, was involved in Barrick’s phased development of the Goldstrike mine in Nevada, the construction of the Pierina mine in Peru and development of the Veladero mine and Argentina.
“Just as the Goldstrike mine was completed in stages over time, we see significant benefits to approaching Pascua-Lama in the same way,” Barrick President Kelvin Dushnisky said in a statement.
Shares in Toronto-based Barrick were up 5 percent at C$23.40 on the Toronto Stock Exchange at mid-session. (Reporting by Susan Taylor; Editing by David Gregorio)