Barrick Gold Corporation (ABX) has announced that the Supreme Court of Chile will not consider its appeal of a lower court decision regarding sanctions imposed on the Pascua-Lama project by the nation’s environmental regulator.
According to an earlier finding by Chile's Environment Court, the environmental regulator (known as the SMA) improperly fined Barrick for environmental infractions in its development of the Pascua Lama mine. Barrick sought to appeal this, citing that the fines reflected applicable laws and commonly accepted legal principles. Nevertheless, the court declined to consider the appeal on procedural grounds, ruling that Barrick is not a party to the case as the original action was brought against the government regulator.
As a result of the court ruling, the environmental regulator will now reevaluate administrative fines it imposed on the Pascua-Lama project.
Earlier in 2013, Chile's environmental regulator halted construction on its side of the project, and imposed sanctions citing "serious violations" of its environmental permit.
The ramp-down was completed on schedule and budget and the mine is now under care and maintenance. Barrick expects to incur costs of roughly $300 million in 2014 due to the ramp-down as well as for the environmental and social obligations.
The decision to re-start will depend on certain factors like improved project economics, outlook for metal prices, and reduced uncertainty associated with legal and other regulatory requirements.
Barrick released its third-quarter 2014 results in October. The company’s adjusted earnings (excluding one-time items) for the quarter plummeted to 19 cents per share from 58 cents in the year-ago quarter but beat the Zacks Consensus Estimate of 16 cents per share. Lower pricing and volumes for both gold and copper led to the decline in earnings.
On a reported basis, profit for the third quarter was $125 million or 11 cents per share, down 27.3% from $172 million or 17 cents per share in the prior-year quarter. The results include $51 million in unrealized losses on non-hedge derivative instruments and $42 million in unrealized losses related to foreign currency translation.
Revenues fell around 13% year over year to $2,598 million in the reported quarter and missed the Zacks Consensus Estimate of $2,479 million. Average realized price of gold decreased 2.9% year over year to $1,285 per ounce. All-in costs declined 17.5% to $975 per ounce while all-in sustaining costs fell roughly 8.8% to $834 per ounce in the reported quarter.
Barrick currently carries a Zacks Rank #3 (Hold).
Other stocks in the mining space worth considering include Banro Corporation (BAA), Pretium Resources Inc. (PVG) and Rubicon Minerals Corporation (RBY), all carrying a Zacks Rank #2 (Buy).
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