At the beginning of November, Barrick Gold's CEO, Jamie Sokalsky, announced yet another jump in the estimated capital costs of the Pascua-Lama mine, from less than $1 billion in 1997, to $3 billion in 2009, to $8 billion in July, to $8.5 billion last month - with "first gold" extracted from the Andean mine closer to the end of 2014 than to the beginning.
But, Sokalsky assured shareholders once again, Pascua-Lama is the company's "top priority."
There are, however, a number of obstacles remaining on the bumpy road to Pascua-Lama, to the delight of some and the dismay of others, from legal wrangling in Chile over the deeds to the vast, frigid territory.
Lucio Cuenca, the director of the Latin American Observatory of Environmental Conflicts (OLCA), a non-governmental organization, has been following the ups and downs of Pascua-Lama, in the courts and in Barrick's boardroom, for the last decade.
"How can there be such a huge miscalculation of costs by one of the top mining companies in the world?" Cuenca asked from his office in central Santiago. "Either they are lying, or they stand to make so much money they don't really care how much they have to invest."
Sokalsky, the new CEO, mentioned "external factors" also contributing to the soaring costs. Perhaps he was referring to the countless protests blocking access roads to Pascua-Lama that have held up construction crews, legal fees to represent Barrick in a number of ongoing court cases.
All of these costs are negligible, however, compared to what Pascua-Lama will bring once it is up and running, thanks to the incredibly low cost of producing gold at the mine, and the precious metal's high price on the market.
In fact Pascua-Lama will be one of the world's lowest-cost mines, because the sale of silver extracted as a by-product - about 665 million ounces - is expected to more than cover the cost of processing the gold. Barrick estimates that it will cost $25 to $50 to produce an ounce of gold, which closed at $1,697 on Friday.
With a suitable compensation package, Barrick might be able to settle out of court with some of the various parties contesting the project, if Barrick's lawyers don't prevail.
One man, Jorge Lope-handia, now a dual Canadian/Chilean citizen, claimed he, not Barrick, holds the deeds to the most valuable parts of the Pascua-Lama territory. Another Canadian mining company, Mountainstar Gold Inc., based in Vancouver, is financing Lopehandia's ongoing suit against the Chilean government in a Santiago court, asking it to "extinguish" the Pascua Protocol signed with Barrick in 1994.
Andy Lloyd, director of communications for Barrick Gold in Toronto, described Lopehandia as a "serial litigant."
By NewClearDay with the help of CATHERINE SOLYOM, The Gazette December 17, 2012
