Chile has temporarily banned operations at gold producer Barrick Gold's flagship $8.5bn Pascua-Lama gold project claiming violations in terms of environmental liabilities.

In addition, environmental authorities of the country have slammed the company with a penalty of $16m. The developments were in line native communities’ allegations that the mine operations have damaged glaciers and harmed water supplies.

The authorities stated that the imposed penalty was pertaining four severe environmental violations around the project, reported Reuters.

Barack Gold has stated that the Superintendence of the Environment in Chile (Superintendencia del Medio Ambiente) has asked the company to conclude Pascua-Lama’s water management system complying project’s environmental permit before restarting operations in the country.

It is currently under the process of reviewing the authorities’ resolution, the company added, claiming that it is committed to complying with the resolution and to operating at the highest environmental standards.

Barack Gold has invested $4.8bn into Pascua-Lama that is estimated to produce 800,000 ounces to 850,000 ounces of gold per year in its first five years of full production.