St. LOUIS (ResourceInvestor.com) -- According to a Chilean news source, the El Diario de Atacama, Rodolfo Villar, a local gold prospector and geologist, has won a court ruling establishing ownership to the properties in the 8600 hectares of land surrounding and including Barrick's Pascua Lama. Barrick is challenging the ruling in a Chilean Court of Appeal.
Vince Borg, Senior Vice President of Corporate Communications for Barrick, confirmed this with RI and said the Villar case is a “nuisance suit.”
According to the news source, Judge Maria Isabel Kings decreed that the transaction awarding Barrick ownership to the properties null and void.
Borg said the ruling was simply to nullify the previous purchase and sale agreement that Barrick made with him over the contested properties in 1997. Barrick has appealed the decision and the case is currently in the Court of Appeal.
“It's small potatoes; he agreed to the agreement years ago and it was a literally immaterial amount,” said Borg.
In early 2004, Pat Garver, chief counsel for Barrick, told Resource Investor’s Tim Wood that Villar went to court with grievances over the price, which was 10,000 pesos (C$20). Judge Kings ruled that such an amount could not be considered contractual; Villar's lawyer is reportedly asking for $100 million.
Borg said Villar is trying to establish claims to surrounding and overlapping properties to which “we have precedence.”
“It's about claim jumping in an area that is beyond the actual Pascua-Lama mineralization,” he added.
According to Borg, the lawsuit will not affect the development of Pascua-Lama.
“We do not believe that the project's development will not be impacted. The claims in question do not affect the area of mineralization. They also will not affect the development of the project infrastructure,” he said.
He said he was unsure of how much exploration potential there is on these claims, but “I suspect not high.”
Pascua Lama
To recap, Barrick [NYSE:ABX; TSX:ABX] is embarking on a controversial gold, silver and copper mine venture along the Chilean and Argentine border, surrounded by glaciers.
In 2004, the governments of Argentina and Chile created a Protocol to the "Treaty of Mining Integration," listing the land leases as belonging to Barrick. The Treaty, written only in 1997, constitutes the legal framework governing the development of the mining business on both country's borders. Before this treaty, it was not possible to mine deposits located in this mountainous region.
Source: Barrick Gold.
The deposit has estimated reserves of 18.3 million ounces of gold with a production forecast of 750,000-775,000 ounces per annum at a total cash cost of merely $130-$140/oz. Pascua Lama is schedule to commence production in 2009.
Barrick estimates the construction cost to be approximately $1.4-$1.5 billion with a further investment of about $250 million in the first three years after production start-up for a plant expansion to increase capacity from 33,000 to 44,000 tonnes per day and for a flotation plant.
In August, Barrick said it planned to submit a plan to Chilean authorities showing that it could safely mine the deposit, including moving parts of glaciers that cover the ore. This plan met heavy environmental opposition and was altered to meet Chilean approval.
The project’s environmental impact study was approved by Chilean authorities in February 2006. However, the mine plan is still under review for final environmental permits from Argentine authorities, who continue to hold up the permits due to local opposition.
In response to conflicting statements that icefields / glaciers will be impacted, Barrick cited the Chilean authorities’ approval:
“...the company shall only access the ore in a manner that does not remove, relocate, destroy or physically intervene the Toro 1, Toro 2, and Esperanza glaciers.”
According to Barrick, approval from the Argentine regulatory authorities was targeted for second quarter 2006. The company filed for its environmental permits in both Chile and Argentina in 2004.
Barrick maintains that 95% of the orebody is not under glaciers/ice fields and protection of the remaining 5% is a key condition of the Chilean authorities’ approval of the project.
“I do not think that [the Villar case] has had the slightest impact on the Argentine approval which is targeted by the end of this year,” concluded Borg.
