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Gold/Mining/Energy : Blue Chip Gold Stocks HM, NEM, ASA, ABX, PDG -- Ignore unavailable to you. Want to Upgrade?

To: Wade who wrote (1350)	2/15/2004 10:34:59 PM
From: Wade	Respond to of 48092

trinity.mips1.net Barrick knocks down Pascua rumours By: Tim Wood Posted: 2004/02/13 Fri 19:34 EST \| © Mineweb 1997-2004 NEW YORK (Mineweb.com) -- Dogged by rumours about its Pascua Lama project, Barrick Gold [ABX] has firmly extinguished the latest conflagration. News travels uncommonly fast in this industry – Mineweb has received calls about a story it was preparing on Pascua even before it was written! In discussions with Barrick this week on the story, the company commented on a couple of calls to its investor relations department linking Mineweb to news on Pascua. The issue was also referenced during Friday’s Barrick investor conference call when analyst Don MacLean, of Paradigm Capital, asked: “I’ve been asked by quite a few clients about some kind of a title challenge for Pascua Lama.” This is what it is all about. Late last week, Mineweb came into possession of a set of notes prepared by a Vancouver firm with a self professed “vested interest” in Pascua. The notes appear to be a corroboration of many of the startling accusations levelled by one Jorge Lopehandia who has been fighting a guerrilla war, consisting mostly of insults and absurd claims, against Barrick for years. He has been dismissed as a gadfly, especially after losing a defamation case in an Ontario court last year when he failed to appear. Nevertheless, the notes recast Lopehandia’s claims in rational language with new information and that caught our attention; and the grapevine’s. Barrick chief counsel, Pat Garver, told Mineweb that the company’s Chilean subsidiary, Compania Minera Nevada (CMN), is involved in limited litigation in Chile related to the Pascua area, but categorically denied that it involved Lopehandia or areas affecting reserves and infrastructure. Hence it has not been declared material. Garver said Barrick has owned Pascua for a decade with title opinions confirming ownership. “The court ruled that no serious business person would take him [Lopehandia] seriously. We don’t think there is an issue there. But someone gets on the Internet and spreads rumours and that’s what you’ve got,” Garver said in response to MacLean. Click to listen to audio clip (52 seconds) The litigation involving Family Villar came about from claim jumping that leveraged uncertainty about the border between Chile and Argentina which had not been surveyed at the time. Barrick agreed to buy those claims out (known as Canario and Moreno) along with several others in order to secure the integrity of its deposit. Garver says that Villar subsequently cried foul and went to court seeking damages because he felt he was paid too little. Barrick has filed to dismiss the action for lack of prosecution since the case has been dormant for two years. The note The third party memo, apparently reprising Lopehandia’s ragings which litter the Internet, claims that Barrick lost a right to any further appeals in December 2003 and that a June 6, 2001 court victory for Lopehandia granted him ownership of Pascua. The memo goes on to claim that additional damages against Barrick are being assessed as a result of the December 2003 judgement. Mineweb spoke to the author of the notes who refused to divulge more information about his involvement without a confidentiality agreement signed by the author. He denied acting as a representative for Lopehandia. Garver says Barrick is not aware of CMN being denied further appeals and certainly not for anything to do with Lopehandia. Similarly, Barrick denies any knowledge of a pending criminal investigation of Barrick’s dealings in Chile. Barrick also disputes that it signed any contract with Lopehandia, which he also contends was fraudulently altered to reflect a lower price. Barrick spokesman, Vince Borg tells Mineweb: “There was a written purchase contract with Villar. The documents were executed before a notary in Chile. There is no evidence of any alteration. It is also our understanding that Villar denies that Lopenhandia has or ever had any interest in the purchase contract or the claims.” Investors hate uncertainty as a rule and there has been far too much of it overhanging Pascua. The company addressed this head on during Friday’s investor briefing, going out of its way to reassure investors that the project is going ahead. Critical to Barrick The Chilean deposit, with nearly 17 million ounces of gold and more than 550 million ounces of silver in reserve, was placed in limbo in December 2000 when it was mothballed because of low gold prices. It was subsequently revived in April 2002 as gold price improvements held. Exactly a year before that, the global number two gold miner said a gold price of $300 an ounce would allow the project to proceed, but this was negated when Barrick announced in September 2002 that it was “optimising” the Pascua feasibility study even as gold prices were hitting $315. The $1.2 billion project is slated to produce 800,000 ounces a year at $85 an ounce and is critical to Barrick’s overall cost profile and ability to maintain steady state production later this decade. Similarly, its massive reserves are essential to dilute Barrick’s hedged ounces of gold, and especially silver; a portion of the hedge book often overlooked. Pascua is a valuation pillar for Barrick; worth around a quarter of net asset value by the estimates of analysts we canvassed. Barrick says this is unusually high, referencing half a dozen analysts whose NAV estimates for Pascua range from 0-10%. That’s a large disparity which makes it difficult to make any definitive statement about the impact on ratings were Pascua removed from valuation models for any reason. That seems unlikely with Barrick chief executive, Greg Wilkins, making a point of repeatedly referencing Pascua. He declared that it will eventually form a “single district mine” with the Veladero project across the border in Argentina. Veladero is due to be commissioned first. Peter Kinver, Barrick’s recently appointed chief operating officer underscored Barrick’s determination to proceed with Pascua by confirming that he heads the steering committee developing the project.