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The Canadian Press - ONLINE EDITION

Chile says courts will decide future of Barrick's Pascua-Lama mine

SANTIAGO, Chile - Chile said Tuesday it will respect the environmental regulator's decision to block work on Barrick Gold's (TSX:ABX) Pascua-Lama mine despite harsh criticism from neighbouring Argentina.

The US$8.5 billion project straddling the Argentina-Chile border has faced problems including rising costs, falling gold prices and environmental lawsuits by indigenous communities in Chile.

The world's largest gold company announced in October that it would suspend construction of the mine. In May 2013, Chile's environmental regulator blocked work at Pascua-Lama, citing "very serious" violations of the work permit.

Argentine Mining Minister Jorge Mayoral recently lashed out at Chile, telling it to "put on its pants" and reach a decision on the project.

Chilean Mining Minister Aurora Williams responded Tuesday that Chile's government will respect environmental authorities and said the mine's future is up to the courts.

"We think Mayoral should explain his own opinions. We're dealing with senior authorities in Argentina, and from that point of view, we already have a very clear opinion from Argentine President Cristina Fernandez," Williams said.

"We're going to respect the environmental legislation," she said. "Chile's government has a very clear idea of how to act and react to projects like these."

Members of Chile's Diaguita indigenous community who live in the foothills of the world's highest mine, say Pascua-Lama threatens their water supply and pollutes nearby glaciers.

Argentine authorities have insisted that Lama, their side of the binational project, will proceed with or without Chile by taking advantage of the infrastructure already in place for its Veladero mine, which is producing ore just downhill.

But most of Pascua-Lama's estimated 18 million ounces of gold and 676 million ounces of silver are in Chile.

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