Source: Barrick Gold

Sinking $5 billion into a project and then walking away from it -- or putting it into mothballs -- is no easy task, so it's understandable Barrick Gold (NYSE:GOLD) continues to plug away at its Pascua-Lama project in Chile, despite saying it's cutting costs there and won't move forward until conditions improve. Yet that may have just happened as the gold miner has apparently reached an agreement that could help it overcome the most significant hurdle it faces.

Pascua-Lama is one of the world's largest gold and silver resources, expected to produce an average of 800,000 to 850,000 ounces of gold and 35 million ounces of silver in its first five years of operation, and it has an expected mine life of 25 years. It's said to possess nearly 18 million ounces of proven and probable gold reserves and 676 million ounces of silver. Its all-in sustaining costs at Pascua-Lama were expected to run at just $50 to $200 per ounce, compared with $975 per ounce as a whole for the company.

Yet arrayed against it has been a veritable cornucopia of forces, from violations of environmental permits and regulations and local indigenous tribes to threats of strikes by workers and out of control costs. The panoply of opposition was massive enough that Barrick was willing to forego further investment despite the sunk costs and take its lumps, which it did. Shares of the miner have lost nearly three quarters of their value after hitting a peak of $55 a share back in 2011 and have lost some 25% in the last three months, even as it's tried to rally back at times. But the first cracks in the wall may be appearing, and that could mean a very bright future for Barrick Gold, indeed.

Of course, the gold miner continues to negotiate with the government and is trying to rescue its environmental permits with the courts, but even if it gained all that it would still be a failure if it could not come to terms with the local indigenous populations that have expressed concern about the project's impact on its water supplies or their cultural heritage. Without a so-called "social license," Pascua-Lama and Barrick would remain dead in the water, regardless of the benefits that would otherwise accrue from restarting the project.

And it's just such a rapprochement that may be in the works that could signal a change in Barrick's fortunes. According to local Chilean media outlets, the miner has signed a memorandum of understanding with 15 Diaguita groups to begin a six-month period of negotiations where Barrick will provide full details to the community about the project subject to verification by outside experts, but paid for by the miner.

The next phase of the agreement, which could last up to two years, would be the start of a dialogue over royalties the communities might receive when the project begins production, ranging between 1% to 5% of sales, similar to agreements in place in other countries like Australia and Barrick's home of Canada. Even so, by entering into this nonbinding agreement, the Diaguita aren't giving up their right to pursue additional legal actions.

Obviously it's not the same as getting the green light on all aspects of the plan and being able to renew activity at the mine, but considering these were the community groups that represented the biggest hurdle Barrick Gold had in its path -- they were the ones that got Pascua-Lama's environmental permit yanked a year ago and were responsible for the construction being halted -- their willingness to still work with the miner is a hopeful sign that Barrick Gold still retains its luster.