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James Turk: Gold hurdles new barriers
Lone Chilean Prospector Fights Giant
for $10 billion Andean Gold Mine
Barrick paid just 10.89 to Rodolfo Villar for land around its
massive gold find. But a court could make this a bad deal for the
Canadians
By Hugh O'Shaughnessy
The Independent, London
Sunday, April 16, 2006
http://news.independent.co.uk/business/news/article357893.ece
In the next couple of weeks a Santiago court could give a humble
Chilean prospector an armlock on the world's largest gold mining
project. The $1.75 billion (1 billion) Pascua Lama project in the
high Andes, which the Canadian giant Barrick Gold has been nursing
toward completion for years, could, produce some 18 million ounces
of gold worth more than $10 billion at today's price, according to
Barrick's predictions.
It is by far the largest operation on the books of Barrick, the C$28
billion (14 billion) corporation that claims to be "the world's
best gold company" in terms of profitability and social
responsibility.
But Rodolfo Villar, a mining graduate and geological fortune hunter
now in his 50s, says that Barrick has no title to rights it claims,
which belong to him. He says he is confident that the civil court in
Santiago, the Chilean capital, will judge in his favour this month
on legal and constitutional grounds. He is backed by Hernn
Montealegre, one of Chile's brightest legal brains, who told The
Independent on Sunday, "Barrick has been arrogant and guilty of
unforgivable negligence."
Mr Villar noticed a few years ago that Barrick had not made the
payment that the Chilean rules demand for a licence or patent to
safeguard rights to 8,600 hectares around the main ore body. Without
them, Pascua Lama, which anyway is covered by three glaciers, would
be impossible to work.
In 1997 Mr Villar signed a contract -- which he says he never read --
to sell these rights to Barrick. He expected to receive $1 million
dollars but received a mere 10,000 Chilean pesos or 10.89,
equivalent to 0.001 peso per hectare. Mr Montealegre says Barrick's
willingness to buy demonstrates that Mr Villar was the owner but
that under Chilean law such a figure cannot be considered a serious
price. Thus the supposed sale is void and Mr Villar still the
rightful owner.
In a further twist to the story, reports in Santiago say that there
is more gold lying in the 8,600 hectares that are in contention than
in Pascua Lama itself.
Barrick's plans have been fiercely opposed by the local farmers who
are fearful of damage to their livelihoods and their sources of
water, particularly if Barrick uses cyanide to recover the gold.
Environmentalists are also concerned about the effect on the
glaciers covering the site.
Barrick is hoping to mine Pascua Lama in conjunction with Veladero,
an adjacent ore body on the Argentinian side of the Andes that
produced 56,000 ounces of gold last year. Veladero went into
production ahead of schedule in September.
In February, Barrick agreed with Antofagasta, the Chilean-based
company quoted on the London stock exchange, that it would acquire a
half share in the Reko Diq gold and copper prospect in Pakistan,
which Antofagasta is trying to buy.
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