Lone Chilean prospector fights giant for $10bn 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

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 $1.75bn (£1bn) Pascua Lama project in the high Andes, which the Canadian giant Barrick Gold has been nursing towards completion for years, could, produce some 18 million ounces of gold worth more than $10bn at today's price, according to Barrick's predictions.

It is by far the largest operation on the books of Barrick, the C$28bn (£14bn) which 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 fifties, 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 Hernán 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 one million dollars but received a mere 10,000 Chilean pesos or £10.89, equivalent to 0.001p 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 which 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 which 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.