TORONTO (Reuters) - Barrick Gold Corp (ABX.TO) said on Friday it is slowing construction at its Pascua-Lama gold project in South America, as it looks to rein in spending on the severely delayed project, already billions of dollars over budget.
The company said re-sequencing of the project will lead to significant deferral of planned capital spending in 2013 and 2014. Barrick now expects to reduce capital expenditures on the project in 2013 and 2014 by a total of $1.5 to $1.8 billion.
Construction at Pascua-Lama, which straddles the border of Chile and Argentina, was partially halted earlier this year after a Chilean court ordered a suspension to weigh claims by indigenous communities that development work had damaged glaciers and harmed water supplies.
Chile’s new environmental regulator later ordered all work to stop, citing severe environmental violations, and demanded the company complete a new water management system before resuming construction. Work on the Argentine side of the project, however was still proceeding.
In light of the delays in Chile, the company now expects to only to be able to mine ore from the Chilean side by mid-2016.
Barrick said in line with this time frame, and in light of challenging market conditions and the slump in metal prices, the company intends to delay construction of the process plant and other facilities in Argentina in order to target first output by mid-2016.
Production from the massive project was earlier set to begin in the second half of 2014.
The company also said it is plans to book impairment charges on the asset in light of the continued significant declines in gold and silver prices, and the delay in first gold production.
Preliminary analysis indicates an after-tax asset impairment charge in the range of about $4.5 billion to $5.5 billion in the second quarter for the Pascua-Lama project, the company said.
Reporting by Julie Gordon and Euan Rocha; Editing by David Gregorio