Chile Slaps Barrick Gold (ABX) with $16.4M Fine, Halts Construction at Pascua-Lama
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(Updated - May 24, 2013 1:42 PM EDT)
Shares of Barrick Gold Corporation (NYSE: ABX) and Silver Wheaton Corp. (NYSE: SLW) were halted mid-day on Friday. The halts likely relate to news that regulators in Chile stopped construction on its Pascua-Lama project due what is being described as "serious violations" of environmental permits. The company was also slapped with a fine of $16.4 million.
Pascua-Lama is an $8.5 billion project. Silver Wheaton owns 25% of the average silver production for the first 5-years.
Commenting, Cowen analyst Adam P. Graf said, "We believe that, when contrasted to the $8.5Bn price tag currently allocated to the project, a $16MM fine appears to have an immaterial affect on our valuation. The project has already experienced delays in the start of production, from 2013 to 2H14, as well as continued cost increases, which now stand at $8.0-$8.5Bn. Once in production, the mine is expected to produce 800,000 to 850,000 oz of gold and 35 million ounces of silver in its first full five years."
Shares of Barrick Gold Corporation (NYSE: ABX) and Silver Wheaton Corp. (NYSE: SLW) were halted mid-day on Friday. The halts likely relate to news that regulators in Chile stopped construction on its Pascua-Lama project due what is being described as "serious violations" of environmental permits. The company was also slapped with a fine of $16.4 million.
Pascua-Lama is an $8.5 billion project. Silver Wheaton owns 25% of the average silver production for the first 5-years.
Commenting, Cowen analyst Adam P. Graf said, "We believe that, when contrasted to the $8.5Bn price tag currently allocated to the project, a $16MM fine appears to have an immaterial affect on our valuation. The project has already experienced delays in the start of production, from 2013 to 2H14, as well as continued cost increases, which now stand at $8.0-$8.5Bn. Once in production, the mine is expected to produce 800,000 to 850,000 oz of gold and 35 million ounces of silver in its first full five years."
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