UPDATE 3-Chile fines Barrick's Pascua Lama, halts gold project

Fri May 24, 2013 5:40pm EDT
 
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* Chilean regulator fines Barrick $16 million

* Company says in process of reviewing regulator's demands

* Barrick, Silver Wheaton shares fall, after being halted

May 24 (Reuters) - Chilean environmental authorities on Friday ordered Barrick Gold Corp to halt work at its massive Pascua-Lama project and fined the company $16 million, citing serious environmental violations at the site.

A Chilean court in April had partially halted the $8.5 billion gold project, which straddles the border of Chile and Argentina, to weigh claims by indigenous communities that Barrick has damaged pristine glaciers and harmed water supplies.

Environmental authorities said on Friday that the fine is related to a serious "breach" and four serious violations of environmental controls around the project.

This is the latest in series of setbacks for the world's largest gold producer as it struggles to balance its need to keep costs in check while attempting to replace ounces through costly projects like Pascua Lama at a time when the price of gold is sagging.

The massive costs of Pascua had led to some speculation that Barrick may mothball the project as part of its drive to reel in capital spending - a trend that has swept across the sector over the past year.

Barrick in a brief statement said Chile's Superintendence of the Environment has asked the company to complete Pascua-Lama's water management system in accordance with the project's environmental permit before resuming construction activities in Chile.   Continued...