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Barrick (ABX) Announces Pascua-Lama Project Status Update

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Barrick Gold Corporation (ABX - Free Report)   issued an update on the Pascua-Lama project status. The project is located on the Chile-Argentina border.  

In January 2017, Barrick reported that the existing infrastructure on the Chilean side of the Pascua-Lama project was ordered to be closed by Chile’s Superintendencia del Medio Ambiente (“SMA”). The order was part of a re-evaluation process, ordered by Chile’s Environmental Court in 2014 in regard to historical compliance issues.  

The company is appealing against the resolution on various grounds. Barrick maintained that the resolution does not affect its ongoing evaluation of an underground, block-caving operation at Pascua-Lama that will require additional regulatory and permitting approvals in both Chile and Argentina, irrespective of the recent SMA decision.

In response to the closure order of the surface facilities in Chile by the SMA and current plans to assess an underground mine, Barrick is reclassifying the project’s proven and probable gold reserves of roughly 14 million ounces. The company expects to incur an estimated pretax impairment of $429 million at Pascua-Lama in the fourth quarter of 2017.

According to Barrick, a shift to an underground operation will address community concerns considerably by reducing the overall environmental impacts of the project when compared with an open pit operation. Additionally, underground operations are less susceptible to weather-related production impacts during the winter season.

Barrick and Shandong Gold also formed a working group to study a potential partnership at Pascua-Lama, building on their existing joint venture at the adjacent Veladero mine.

Shares of Barrick fell 3.6% in the last three months, underperforming the industry’s 2.8% decline.



Last month, Barrick declared preliminary production results for the fourth quarter and full-year 2017. The company stated that preliminary full-year gold production of 5.32 million ounces for 2017 came in line with its adjusted guidance range of 5.30-5.50 million ounces. Gold production for the fourth quarter was 1.34 million ounces. The company’s preliminary full-year and fourth-quarter gold sales were 5.30 million ounces and 1.37 million ounces, respectively. Average market price for gold during the fourth quarter was $1,275 per ounce.

Zacks Rank & Stocks to Consider

Barrick currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Methanex Corporation (MEOH - Free Report) , Steel Dynamics, Inc. (STLD - Free Report) and LyondellBasell Industries N.V. (LYB - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Methanex has an expected long-term earnings growth rate of 15%. Its shares have soared 33.7% over the last six months.

Steel Dynamics has an expected long-term earnings growth rate of 12%. Its shares have moved up 28.3% in a year’s time.

LyondellBasell has an expected long-term earnings growth rate of 9%. Its shares have gained 28.3% over the last six months.

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