(Adds analyst comment on potential for joint venture with Shandong, updates stock price)
SANTIAGO/TORONTO, Jan 18 (Reuters) - Environmental regulators ordered Barrick Gold Corp to close the Chilean side of its stalled Pascua-Lama mining project on Thursday, but reduced a 2013 fine for violations by more than 25 percent to $11.5 million.
Barrick, the world's largest gold producer, said that closing surface facilities in Chile is consistent with its plan to advance a study on underground mining at Pascua-Lama, which straddles the border of Argentina and Chile in the Andes Mountains.
The contentious gold and silver project was put on hold in 2013 due to environmental issues, political opposition, labor unrest and development costs that ballooned to $8.5 billion.
The regulator has jurisdiction only on the Chilean side of the project, which Barrick is now operating under a temporary closure plan.
Based on its preliminary review of the sanctions, Barrick said regulators did not revoke an environmental permit for the project, but have ordered certain monitoring work.
Barrick shares were down about 1 percent at C$18.01 on the Toronto Stock Exchange and $14.41 in New York.
RBC Capital Markets analyst Stephen Walker said he expects Barrick to modify its development plan, to access higher-grade ore on the Chilean side of the project via Argentina.
Toronto-based Barrick is studying a scaled-back development at Pascua-Lama, starting with underground mining in Argentina.
"There is potential for the project to be developed as a 50/50 joint venture with their strategic partner Shandong Gold," he added in a note to clients.
Barrick sold 50 percent of its Veladero mine in Argentina to China's Shandong Gold for $960 million in early 2017.
Chilean regulators were ordered to re-evaluate their $16 million fine in 2014 by an environmental court, which said the penalty was not properly determined. At the time, the regulator said it would consider everything from a warning to permit cancellation or a fine.
Barrick has spent more than $4.8 billion on the project, which was expected to produce 800,000 to 850,000 ounces of gold annually in its first five years of full production.
In 2016, Chile rejected an attempt by local communities to block modifications needed to keep the project alive. Opponents worry the development will pollute and crimp already scarce water resources in the country's arid north. (Reporting by Fabian Cambero in Santiago and; Susan Taylor in Toronto; Writing by Caroline Stauffer and Susan Taylor; Editing by Lisa Von Ahn)