Mining companies must comply with Glacier Law-Argentine Supreme Court - POLITICAL ECONOMY - Mineweb.com Mineweb

From BMO: More noise out on Argentina overnight, with reports that courts have rejected Barrick’s (ABX CN, Outperform, $65 price target) glacier injunction, which could impact its mine at Pascua-Lama.   ABX has responded saying “Our activities do not take place on glaciers and Barrick remains in full compliance with existing environmental approvals, including provincial glacier protection legislation”.

This document discusses ABX’s requirements with regards to avoiding certain areas of glaciers: http://www.barrick.com/Theme/Barrick/files/responsibility-reports/2010/Pascua-Lama.pdf.

Our analysts view is that Pascua is fully permitted for construction and mining and that the glacial issue was considered in the granting of those permits.   However, these are different times, and Argentinian policy as of late has not exactly been mining friendly.

Pascua-Lama is 11.7% of our NPV.  We have start up mid 2013.  Capex of $3.4B from 2012 going forward (in addition to $2.7B already spent) and sustaining of $2.1B

ABX could be weak on these headlines, and with uncertainty still over the potential for negative cost and guidance revisions and other assets, we would avoid this stock in the near-term.  Silver Wheaton (SLW CN, Outperform, $47.36 target) may also come under pressure, as it has the royalty on the Pascua-Lama, but they are guaranteed payments from ABX regardless of whether or not the mine enters production, so weakness in SLW could present a buying opportunity. 

See the article on Mineweb:  Mining companies must comply with Glacier Law-Argentine Supreme Court - POLITICAL ECONOMY - Mineweb.com Mineweb