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By Cameron French
TORONTO, Oct 30 (Reuters) - Barrick Gold ABX.TO is looking at options to try to get past a cross-border tax dispute holding up its Pascua Lama gold project, an 18-million-ounce deposit that straddles the Chile-Argentina border.
On a conference call to discuss the gold miner’s third-quarter earnings, General Counsel Patrick Garver said the company has made progress recently in nailing down sectoral permits for the project, although the key tax dispute between the two countries remains an obstacle.
“We have seen a bit of a logjam break,” Garver said, referring to recent successes on the Argentine side, where progress has slower than on the Chilean side.
“So we’re pushing ahead, but we’re also looking at different options associated with the project.”
These could include coming up with revised engineering plans or shifting the planned processing site from the Argentine side to the Chilean side, to get around lingering disputes over the movement of goods and services across the border, Barrick spokesman Vince Borg said.
Such changes to the plan could require Barrick to go back and re-permit some aspects of the operation, and could further delay the mine, which once it opens will also be the world’s largest single source of silver.
Borg said recent permitting successes include getting Argentine water rights. As well, Chile and Argentina have resolved the issue of export taxes, which are tricky as ore mined on one side of the border will often have to cross to the other side to be processed before it is exported.
Making things difficult are the logistics of the site, which sits high in snow-capped mountains some 5,500 meters (18,000 feet) above sea level.
Construction must take place during the summer season, which runs from September to February. Failing to reach an agreement until late in the season would force Barrick to wait until the following September.
Borg wouldn’t disclose how much Barrick spends each month at the site.
However, despite the delays and a price tag likely to have ballooned well above last year’s estimated $2.4 billion, Pascua Lama is seen by many as just too valuable to consider walking away from.
“It’s a key area of growth for them,” said Haytham Hodaly, analyst at Salman Partners.
“I don’t think they would walk away from it. I think they would look at ways to look at costs further.”
Still, John Ing, president of Toronto investment dealer Maison Placements, said he sees a chance that the project may not go forward, given both the tax despite, and technological challenges.
“If you don’t have a good tax agreement, this is a nonstarter,” he said. (Reporting by Cameron French; Editing by Peter Galloway)