In an interview with Reuters, Chile's mining minister said that she has met with Barrick Gold Corp (NYSE:GOLD) and that the company expressed its interest in restarting its controversial Pascua-Lama project. This would seem to be a major turnabout since during the company's recent first quarter results, Barrick stated that ramp-down was on schedule to be completed by mid-2014 .

During the fourth quarter of 2013, Barrick Gold had announced it was temporarily suspending operations at Pascua-Lama. The company said that any decision to restart development would depend on two things: improved economics and reduced uncertainty related to legal and regulatory requirements .

What has changed?
On the economics side, the only thing that appears to have changed is the price of gold. Barrick has not released any updated economics regarding Pascua-Lama, though it has stated that it wishes to pursue strategic partnerships or either royalty or streaming agreements in order to reduce financial risk. Barrick Gold signed a streaming agreement with Silver Wheaton (NYSE:SLW) in 2009 to provide 25% of silver production over the life of the mine in exchange for $625 million. With the project currently in limbo, however, it is hard to imagine Barrick Gold being able to make any other deals at this point in time.

On the legal side, things aren't looking too good either. Barrick Gold is not allowed to resume construction activities until it completes the water management system in accordance with the project's environmental permit, though the company is appealing that ruling in court. This is the result of a compliance failure of the water management system that violated the project's permit conditions. Even before this incident, the project was a flashpoint for protests and demonstrations in Chile as local residents and environmentalists contended that the project would poison local rivers and harm nearby glaciers.

Legal and environmental issues aside, it seems odd that Barrick Gold is in talks to restart Pascua-Lama when the company appears to be doing a good job of reducing costs. Restarting this capital-intensive project seems to fly in the face of all the hard work Barrick Gold has done and brings into question the leadership of the company. To date, Pascua-Lama has proven to be a bottomless pit that Barrick just keeps dropping more money into. The original budget for the project was pegged at $3.0 billion in 2009, but cost overruns due to delays and environmental issues have led to $5 billion already having been spent on the project. Total costs to complete the project are now estimated at up to $8.5 billion.

Given the amount of money already spent and the huge gold and silver resources at Pascua-Lama, it is understandable that Barrick wants to resume construction. The timing seems strange given the current low gold price, however. If Pascua-Lama makes it to production, Barrick is estimating that it will produce 800,000 to 850,000 ounces annually over the first five years . With over 15 million ounces of proven and probable gold reserves and 675 million ounces of silver reserves contained within Pascua-Lama, it is world-class deposit . However, with Barrick Gold already taking a $5.1 billion writedown on the project and with over $3 billion or more in capital expenditures still required, it doesn't seem to make sense for Barrick to proceed until gold prices rise.

Itchy trigger finger
With Barrick's recent failed attempt to merge with Newmont Mining (NYSE:NEM) still stinging, you get the sense that Barrick is desperate to do something just for the sake of doing something. Barrick reported excellent results in regards to cost-cutting for the first quarter, with all-in sustaining costs coming in at $833 an ounce; this is lower than the 2014 guidance of $920 to $980 an ounce. Barrick has divested approximately $1 billion of non-core assets since last July, and the company has reduced its stake in the high-cost African Barrick Gold Corp by 10% during the quarter.

With all this good work being done, it seems counterproductive for Barrick to restart Pascua-Lama at this time. With the current low gold prices, it might make more sense for Barrick to pursue an acquisition that may be undervalued as opposed to sinking more money into Pascua-Lama.

Foolish takeaway
With Barrick flip-flopping on Pascua-Lama, investors will want to keep a close on developments. The timing of these talks with the Chilean government seems peculiar and contradicts Barrick's earlier statements about not restarting the project unless economics improve. Investors will want to keep a close eye on any changes to cost estimates regarding Pascua-Lama. Further cost increases in the project could prove disastrous for the company and would likely erode investor confidence even further.