Barrick’s Third Largest Gold Mine Suspended ‘Indefinitely’

Summary

The leakage of cyanide-bearing solution at Veladero, Barrick’s third largest gold mine, has caused its so-called ‘indefinite’ suspension.

The Argentinean Environment Minister has called Provincial officials to implement criminal proceedings with respect to the incident.

The event occurred almost exactly a year after an earlier more serious toxic solution spill at Veladero which led to the mine being blockaded by locals.

Veladero is a very important gold mine for Barrick Gold (NYSE:ABX). It is one of its five core gold mining operations, and the company’s third largest gold producer accounting for around 10% of the its 6 million ounces a year global attributable output of the yellow metal. We have already commented on the seriousness of the recent overflow of toxic solution – containing cyanide – in terms of its relationship with the San Juan Provincial, and the Argentinean Federal, Governments – see: Barrick Gold’s Latest Veladero Spill Bad News For Argentinean Gold Mining. And it could hardly have come at a worse time with Barrick looking again at trying to rescue something from its hugely costly Pascua Lama project, which is nearby geographically and falls under the same Provincial administration.

What is truly problematic here is that the Veladero incident comes less than a year after what has been reported as a far more serious spill, also involving cyanide leach solution, which is reported to have entered five local river systems, which the company was slow in reporting, and is said to have downplayed the seriousness of the pollution of the local environment. Barrick is supposed to have taken huge, and costly, measures to ensure this does not happen again – yet the new spill happened almost a year to the day from the previous event, and Barrick apparently took four days to report it to local officials and shareholders – considered an unacceptable breach of protocol by local officials.

Barrick CEO, Kelvin Dushnisky, made light of the incident in his presentation last week at the Denver Gold Forum meeting in Colorado Springs. “Unfortunately, last week, we had an incident on site, where a large piece of ice on the heap leach pad fell and ruptured one of the pipelines carrying process solution, relatively small amount of solution went over the berm designed to contain it. While we take it very seriously, the good news is, it was a relatively small amount of material we’ve already put it back on the pad and remediated the area, where it was released.

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Lawrence Williams

Lawrence (Lawrie) Williams is a well known London-based writer and commentator on financial and political subjects, but specialising in precious metals news and commentary. He is a qualified and experienced mining engineer having graduated in mining engineering from The Royal School of Mines, a constituent college of Imperial College, London – recently described as the World’s No. 2 University (after MIT). He has worked in mines in South Africa (gold, uranium and platinum), Canada (uranium), Zambia (copper) and U.K (coal) and holds a South African Mine Managers certificate. He also worked as a gold mining company analyst for one of the major South African mining houses. He left South Africa to join Mining Journal as Financial Editor and worked his way through that organisation to edit Mining Magazine, and then join the Board. He was Managing Director (CEO) of the company for 13 years up until it was sold in 2001. During part of this period he was also President of Nevada-based U.S. company Mining Media Inc which was publisher of North American Mining magazine.