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El Morro freeze may be lifted within year: New Gold

Site of the El Morro project in Chile

Barrick

Court rulings that froze construction at the massive El Morro gold and copper project in Chile could be resolved within the year, putting it back on track to become one of the Andean country's largest new mines, according to minority partner New Gold Inc.

"We think it will be about 12 months," New Gold executive chairman Randall Oliphant said on Thursday.

The El Morro project was put on hold in April after Chile's Supreme Court suspended approval of an environmental permit in order to consult with a local farming community, Comunidad Agricola Los Huasco Altinos, concerned about the impact of the mine on its lands. The consultation process had no set time frame and was meant to help identify mitigation measures on impacts to the community.

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The project had already been granted an Environmental Impact Assessment, or EIA, when the Huasco Altino group asked in an appeal to a court in Antofagasta, in the heart of Chile's desert mining region, to address certain deficiencies.

Vancouver-based New Gold, a mid-sized Canadian miner, owns 30 per cent of the project that will be transformative to its production base. The majority stake is owned by Goldcorp Inc., Canada's second-largest gold miner.

"I think this is more an issue for the Chilean government than it is for our company," said Mr. Oliphant. "I think, given the importance of mining in Chile, and the scale of the projects that they have, they've got probably a greater vested interest in solving this than we do."

The $3.9-billion mine was supposed to start construction in September and take five years to build.

New Gold is targeting production growth to more than on million ounces of gold per year, from some 400,000 ounces a year today.

As well as El Morro, a key pillar of that growth will be output from the Blackwater gold and silver project in British Columbia, which will likely be on line in 2017, Mr. Oliphant said on Thursday.

Blackwater, a $1.8-billion project, will add 569,000 ounces of gold output per year to the New Gold portfolio.

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