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Barrick Gold to book US$429M impairment at Pascua Lama project in Q4'17

Barrick Gold Corp. said Feb. 6 that in light of the recent orders by Chile's environmental agency, Superintendencia del Medio Ambiente, to close surface facilities on the Chilean side of the Pascua Lama gold-silver project, located on the Chile-Argentina border, the company is reclassifying the project's proven and probable gold reserves.

An approximately 14 million ounces of proven and probable gold reserves, which are based on an open pit mine plan, will be reclassified as measured and indicated resources. As a result, Barrick expects to book an estimated pretax impairment of US$429 million at the Pascua Lama project in the fourth quarter of 2017.

In mid-January, SMA ordered the closure of existing facilities on the Chilean side of the property. Barrick is appealing the resolution, including on the basis that the sanction is disproportionate to actual environmental impacts.

Barrick added that the regulatory decision does not impact the ongoing evaluation of an underground, block-caving operation at Pascua Lama, which requires additional permitting and regulatory approvals in both countries. A shift to an underground operation is expected to address community concerns by significantly reducing the overall environmental impacts of the project, and the project is expected to be less susceptible to weather-related production impacts.

As decided earlier, Barrick and Shandong Gold Mining Co. Ltd. formed a working group to study a potential partnership at Pascua Lama, building on their existing joint venture at the nearby Veladero mine.