Chile rejects Barrick’s appeal to resume work at Pascua Lama

A Chilean appeals court rejected Canadian Barrick Gold (NYSE, TSX: ABX) subsidiary Minera Nevada’s plea to reverse the order to suspend construction on the troubled Pascua Lama gold and silver project, reports University of Chile’s radio (in Spanish).

The decision, which affects the Chilean side of the project straddling the border with Argentina, was announced on April 10 after indigenous communities complained that Pascua Lama was threatening their water supply and polluting glaciers.

The appeals court in the northern city of Copiapo charged the Toronto-based gold miner with “environmental irregularities” during construction of the world’s highest-altitude precious metals mine.

Chile’s environmental and mining ministries are on record backing suspension of work on the Andes mine. Opponents claim construction has spread dust that has settled on the nearby Toro 1, Toro 2 and Esperanza glaciers, accelerating their retreat, and is threatening the Estrecho river, which supplies water to the Diaguita tribe living downstream.

Barrick has repeatedly said it would work “to address environmental and other regulatory requirements” on the Pascua side of the project. But it insisted construction will continue on the mine’s Lama portion in Argentina, where mining is regulated by provincial governments rather than national officials.

Pascua Lama, which would produce about 800,000 to 850,000 ounces of gold a year in the first full five years of its 25 year life, was scheduled to start production in the second half of 2014. The mine is set to become one of the top gold and silver mines in Chile, the world’s biggest copper producer.

Barrick’s shares hit a 20-year low of C$17.97 on April 17.

(Image of protests in Santiago, Chile, against Pascua-Lama back in 2007)