Barrick and Pascua Lama: Munk and Borg's lobbying pays off

photo source

In the last couple of weeks, both Argentine and Chilean press reported that Peter Munk and Vince Borg of Barrick (ABX) met with the countries' respective presidents (Klishtina and Michelle) to try and get the company's massive but expensive and environmentally complicated Pascua Lama gold project moving.

The sticking point of the project that straddles both countries high up in the Andes has been the tax regime, but it seems that the three parties have come to a broadstroke agreement. Here's Reuters with the info:

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SANTIAGO, April 29 (Reuters) - Chilean tax authorities reached a deal late Tuesday with their counterparts in Argentina over tax issues related to Barrick Gold's (ABX.TO) Pascua Lama gold project, but said some minor issues remain to be resolved.

Pascua Lama, one of the world's last known mega-gold finds, is located about 5,500 meters (18,000 feet) above sea level and holds a treasure trove of some 18 million ounces of gold. It is also one of the world's largest silver deposits.

Chile's tax authority said the tax issues were agreed upon at a meeting in Buenos Aires on Tuesday.

"During the meeting, a deal was reached to resolve tax issues related to transborder services and some others that remained outstanding," Chile's tax authority said in a statement.

CONTINUES HERE

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So what to expect from here? Tough to say how it will pan out right now, to be honest. The whole thing certainly isn't cut'n'dried and done with and I'm anticipating a mix of the following

1) Enviro protesters ramping up their voices in opposition. To be honest they have a case, here. Details can be found all over the interwebnetpipes via that Google thingy, but I'd strongly suggest you read both sides of the argument and not swallow either sides' propaganda whole.

2) Argentina and Chile will likely get bogged down in the unspecified details, as this saga has been going on all decade and there's no reason to suspect that today's announcement declares a final definitive accord. LatAm is as LatAm does and you'd be wise to remember that.

3) Barrick will do the pipes and whistles on the news in the next few days.

That's just three personal ideas and there will be a lot more thrown into the mix, for sure. My personal bottom line on this is witout particular opinion, but I'm a keen observer of the issue and will be watching the developments going forward. However for those looking for an investemnt angle on this news, take a good look at International Royalty Corp (IRC.to) (ROY) as it has a chunk of the revenue stream of Pascua Lama and is trading at low levels right now. You'll probably get more bang-per-buck playing the latent behind-the-scenes royalty holder than ABX itself. But make sure you DYODD dude, as I own IRC.to in my long-term never-touch-it portfolio.

Pascua Lama: Merry Christmas Señor Che Politico

The planned mine at Pascua Lama

Let's catch up on the recent story about Barrick's (ABX) Pascua Lama gold project high high up in the mountains and lying, quite literally, on the border of Chile and Argentina:

• Argentina's parliament passed a law to protect all glaciers on national territory.

• The Pascua Lama project involves the removal, or repositioning (or whatever word Barrick uses) of a glacier way up there to get at the gold mineral body.

• Therefore, the law as passed would have scuppered the planned mine once and for all (I think...most of the site is on the Chilean side of the border. I honestly don't know if it could go ahead in a reduced form only on the Chilean side, but I highly doubt it).

• So Klishtina decided to veto the law and did so on October 22nd. This means Barrick can still build its mine.

Which brings us to the present day and the next bit gets interesting. This is because Argentina's lower house is re-introducing the law to parliament. It needs to get through the lower (Deputies) and upper (Senate) houses to make it into law now. And as it is a second passage it needs a two-thirds majority from both chambers. But the rub here is that if it does pass, the President of the Republic is legally obliged to sign it into law. No more vetoes allowed.

I can hear those Argentine politicos rubbing their hands right now! That's because they have the fate of a multimillion, nay billion, dollar project at their mercy, the stuff dreams are made of in their circles, quite frankly. Also, worth adding into the mix that ABX is a worldly-wise company and understands....hmmmm, how shall we say this?......understands the power of effective lobbying.

Therefore Otto makes the following prediction: The vote to reinstall the glacier protection law will get through the lower house. It will then get a majority in the Senate but will fall short of the 2/3rds needed. This proposed law will get nowhere and Barrick successfully negotiates another hurdle in its "build a mine at Pascua Lama" marathon



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Barrick, Pascua Lama, Argentina, Chile

Barrick, Pascua Lama, Argentina, Chile

Argentina and Chile are finally moving forward on the Barrick (ABX) Pascua Lama gold mine project. As Bloomie reports in English, Chilena newspaper "La Tercera" writes that the relevant authorities from both countries will meet later this month to try to hammer out fiscal matters on the mine that straddles the two countries way up high in the Andes.

Even by LatAm standards, this project has been severely delayed. Just google the name and you can find plenty of "it'll be operational by 2002" and then "one year later" and then "by 2005" and then "by 2008" comments from Barrick talking heads. The environmental angle is strong, too, with well organized protests on both sides of the border due to the way the mine will have to "relocate a glacier" to get at the orebody. For sure the EIA conditions will be very stringent, but that shoudn't be a project-killing problem in the 21st century and I'd wager right now that the project gets green lighted before the end of the year (but I would't wager too much money). As for beneficiaries, ABX will certainly like to move the mine forward, but maybe the better play would be International Royalties (IRC.to) (ROY) that has bought a tasty chunk of Pascua Lama royalties on a sliding scale (see the company website linked here for details) DYODD, dude.