When you're in trouble, by all means keep digging, but just slow down the pace a bit. At least that is the solution Barrick Gold (ABX-T, ABX-N) has devised for its bloated Pascua-Lama gold mine project under construction in Chile and Argentina.
In a release put out on a late Friday afternoon before a long weekend in Canada, Barrick states that it has submitted a plan, subject to review by Chilean regulatory authorities, to construct the project’s water management system for completion by the end of 2014, after which it expects to complete remaining construction works in Chile, including pre-stripping. That means ore from Chile would be available for processing by mid-2016.
More to the point, Barrick says that "in line with this timeframe, and in light of challenging market conditions and materially lower metal prices, the company intends to re-sequence construction of the process plant and other facilities in Argentina in order to target first production by mid-2016 (compared to the previous schedule of the second half of 2014)."
It notes that re-sequencing the project "primarily entails a reduction in project staffing levels as construction is extended over a longer period of time to coincide with the availability of ore from Chile in mid-2016."
On the upside, this will reduce planned capital spending in 2013 and 2014, by US$1.5 billion to1.8 billion. Barrick says it will update the total capital cost of the mine in the third quarter of 2013, once the re-sequencing schedule is finalized.
Barrick says it is conducting impairment testing "as a result of recent and continued significant declines in gold and silver prices, and the delay in first gold production," and that preliminary analysis indicates an after tax asset impairment charge in the range of US$4.5 billion to $5.5 billion in the second quarter of 2013.
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