Chile's Supreme Court yesterday turned down an appeal by the world's biggest gold miner, Barrick Gold Corp, related to a $16-million fine imposed by the country's environmental regulator, SMA.
In a statement, Barrick said, ''Supreme court of Chile has declined to consider an appeal of a lower court decision regarding sanctions imposed on the Pascua-Lama project by the country's environmental regulator.''
In May 2013, SMA had fined Barrick $16 million for not complying with some of the country's environmental requirements related to Barrick's $8.5-billion Pascua-Lama gold mining project in Chile-Argentina border.
However, Chile's environment court found that SMA improperly determined administrative fines levied against Barrick.
Barrick appealed in the Supreme Court arguing that the fines were calculated based on applicable law and commonly accepted legal principles.
The court declined to consider the appeal, ruling that Barrick is not a party to the case, because the original action was brought against the government regulator.
Further to the ruling, the SMA will now reevaluate the fines it imposed on the Pascua-Lama project. Barrick has not indicated how much the fine would be.
According to some estimates, the fine could be raised substantially higher to $130-$300 million.
The Pascua-Lama project contains one of the world's largest gold-silver resources with over 15 million ounces of gold reserves and 675 million ounces of silver reserves as of 31 December 2013.
The project, which was deemed to significantly boost Barrick's gold output, ran into delays, cost overruns and legal and regulatory hurdles, resulting in temporary suspension of the project in the fourth quarter of 2013.
Barrick incurred impairment charges of $5.1 billion on Pascua-Lama in the second quarter of 2013 as a result of slumping gold prices. (See: Barrick Gold to take $5.5-bn writedown on Pascua-Lama project in Chile)
Spot prices on the yellow metal has plunged around 38 per cent from its all-time peak of around $1921 an ounce in September 2011 to around $1184 yesterday. Compared to the March high of $1380 an ounce, the price has dropped 14 per cent.
Barrick said the company remains committed to working with its stakeholders and local communities in Chile to advance Pascua-Lama in an environmentally responsible manner, respecting legal and regulatory requirements.
In the second quarter of 2014, Barrick signed a memorandum of understanding (MoU) with a group of 15 indigenous communities and associations in Chile's Huasco province, marking the first step in establishing dialogue and working to build trust with members of this important stakeholder group.