Protest Barrick
Home About us Issues International Campaigns Press Actions

Barrick skeptical on Pascua-Lama project

by Reporting by Robert Melnbardis; editing by Matthew LewisREUTERS

NEW YORK (Reuters) - Barrick Gold Corp (ABX.TO: Quote, Profile, Research) is not convinced there will be a resolution soon of tax and permit issues delaying its proposed $2.4 billion Pascua-Lama mine in Argentina, its chief executive said on Wednesday.

Greg Wilkins, CEO of Barrick, the world's top gold producer, said he met with Argentina's mining secretary, Jorge Mayoral, last week to discuss the gold-silver project.

"I got all the assurances in the world, but I'm skeptical because I've had all the assurances in the past and we continue to struggle," Wilkins told the Reuters Global Mining Summit.

"I do believe that it's going to boil down to a senior level political will," he said.

He added that in the past, however, he has been reluctant to take similar discussions above the government department level to top political leadership.

Pascua-Lama straddles the Andes between Argentina and Chile and needs the two countries to agree on how to share tax proceeds. Key permits are also outstanding.

Pascua-Lama holds at least 18 million ounces of gold. Once it is a mine, Pascua-Lama also will be the world's largest single source of silver.

Wilkins, who took over on Wednesday as chairman of the World Gold Council, a marketing organization, said he sees upward short-term momentum in gold prices as investors stay in the market as a hedge against downward trends in the U.S. economy.

Spot gold <XAU=> was trading near $980 an ounce just after midday on Wednesday.

Wilkins is bullish on gold longer-term too, largely because the global mining industry faces a growing imbalance between restricted supply and higher demand for the precious metal.

"We're just not hitting any discoveries. It's abysmal, actually," he said, referring to the industry at large.

ATTRACTIVE TIME FOR ACQUISITIONS

Political uncertainty in a number of countries makes it difficult to make long-term investment decisions about gold exploration and development, he said.

In addition, projects are becoming much larger-scale, requiring considerable capital commitments, as deposits become less accessible and costs rise.

On the financing side, Wilkins thinks the global credit squeeze is not affecting producers at the top end of the mining food chain.

"Unlike others in the space, the investment grade market is still quite deep," he said.

That means Barrick, which became the global No. 1 gold miner through strategies that included timely takeovers and asset acquisitions, is ready to retain its role as consolidator.

"Of course spreads have widened, but rates on an absolute level have come off, and spreads will come in, and the Fed is going to keep dropping rates, so I think it's an attractive time to borrow money for acquisitions," Wilkins said.

He cited Barrick's just-completed buyout of Rio Tinto's (RIO.L: Quote, Profile, Research) 40 percent stake in the two companies' Cortez joint venture in Nevada for $1.7 billion as a deal shareholders and bankers were keen to back, in part because as partner, Barrick already had "perfect information" about the mine.

"There was no bargain, but I think in time it will prove to be a bargain because we're going to continue to find more gold there," he said.

Production at Cortez is forecast to produce some 250,000 ounces of gold this year, and plans are to ramp that up to 1 million ounces as its Cortez Hills development is commissioned.

(For summit blog: here)

 

Join our e-mail list