Barrick Gold said that it has decided to temporarily suspend construction activities at its $8.5bn Pascua-Lama mine project located in the Andes Mountains, on the Chilean-Argentine border.
The company said the decision to restart will depend on improved project economics like go-forward costs, the outlook for metal prices, and reduced uncertainty associated with legal and other regulatory requirements.
Barrick Gold president and CEO Jamie Sokalsky said, "We have determined that the prudent course - at this stage - is to suspend the project, but naturally we will maintain our option to resume construction and finish the project when improvements to its current challenges have been attained."
In September 2013, the Supreme Court of Chile upheld an environmental permit for the project, on the condition that a satisfactory water management system is built.
Barrick announced late in June 2013 that it would delay the production at the gold and silver project until mid-2016.
The Pascua-Lama mine is estimated to contain reserves of 17.9 million oz of gold and 676 million oz of silver.
Situated at an altitude between 3,800m and 5,200m, Pascua-Lama's mine life is expected to be 25 years.
Canada-based Silver Wheaton signed an agreement signed with Barrick Gold in September 2009 to buy 25% of the silver produced from the mine.
Reacting to Barrick's move, Silver Wheaton said the company's decision to suspend operations until they have full access to the Pascua-Lama site was a fiscally prudent approach, which under the current circumstances, should enhance the project's capital efficiency and improve its economics going forward.
The original contract provided Silver Wheaton with a completion test, requiring Barrick to complete Pascua-Lama to at least 75% of design capacity by 31 December 2015.
As part of the newly revised agreement, Silver Wheaton will now be entitled to another year of silver output from the three Barrick mines to cover any production shortfall at Pascua-Lama.
Image: Pascua Lama open-pit mining project is located in the Andes Mountains on the border of Chile and Argentina.