TORONTO - Moody's Investors Service says Barrick Gold Corp. (TSX:ABX) has been placed under review for a potential ratings downgrade after a Chilean court last week ordered a halt to construction at the miner's $8 billion Pascua-Lama project due to environmental concerns.
The ratings agency launched the review as Barrick's shares tumbled on the developments at Pascua-Lama and a decline in gold prices.
Barrick's stock hit fresh 52-week lows throughout the week, closing down 5.6 per cent to $18.17 on Wednesday.
Work on the Chilean mine was suspended last week after the appeals court in the northern city of Copiapo charged the Toronto-based gold miner with "environmental irregularities'' during construction of the world's highest-altitude gold and silver mine.
The start date for the mine, which straddles the Andean border with Argentina, has already been delayed by more than six months to the second half of 2014. Cost overruns have seen the price tag rise from $3 billion to more than $8 billion.
Moody's said it will consider a number factors that affect Barrick, which has seen production for 2013 relatively flat or weaker compared to a year earlier.
"The review will focus on steps Barrick can take to improve its cost profile, the impact of, possible responses to, and timing with respect to the Pascua-Lama situation," Moody's said in its announcement.
It will also consider "other possible actions that could support the earnings and cash flow generation profile and minimize the need for continued incremental increases in debt."
"Should the review result in a downgrade, it is not likely to be more than one notch," the agency added.