Barrick says to start building Pascua-Lama in '06

Barrick says to start building Pascua-Lama in '06

by Hilary Burke

10th January 2006

BUENOS AIRES, Argentina (Reuters) - Canada's Barrick Gold Corp. said on Tuesday it expects to begin building its $1.5 billion Pascua-Lama gold mine project on the Chile-Argentina border this year, despite stiff environmental opposition and with government approval still pending.

Barrick spokesman Vince Borg said construction would likely start after the Southern Hemisphere winter, which ends in late September.

"We are counting on September as getting a full construction season in. That would keep us on line for our 2009 production start-up," Borg told Reuters during a telephone interview, adding that 5,500 direct jobs would be created during the construction phase.

Toronto-based Barrick (ABX.TO: Quote), slated after a pending merger to become the world's top gold miner, has been trying to prove for more than a year that the Pascua-Lama project in the Andes mountains is environmentally viable.

A regional environmental commission in Chile asked Barrick to redesign the project and possibly turn part of it into an underground mine to avoid disturbing glaciers that lie over the area that Barrick wants to excavate.

Barrick planned to submit additional information to Chilean environmental authorities before January 10 to further clarify how aspects of the mine plan would respect the environment.

A final decision by authorities is expected by March. But Borg said even if a decision came early in the second quarter, the company would still plan to start building in 2006.

Barrick is confident the ruling will be in its favour.

"We think it's a very worthwhile project that will generate substantial economic benefits to the region and to San Juan (province) in Argentina, and it'll be done in an environmentally responsible fashion," Borg said.

The Pascua-Lama project, which plans to access 17.6 million ounces of gold reserves through an open-pit mine design, has generated controversy in Chile since Barrick opted to revive it over a year ago on a scale larger than a previously approved plan.

Environmentalists fear the effects of moving glaciers and say the project will contaminate water resources in northern Chile. Glaciologists cited by Barrick recently redefined the glaciers as ice reservoirs, but that only intensified opposition.

Barrick recently improved its takeover offer for Placer Dome Inc. (PDG.TO: Quote) to $10.4 billion, winning Placer's approval for a deal that would turn the two Canadian miners into the world's biggest gold producer.