A chill is settling on the Earth's equator. Ecuador is the latest country to freeze mining and revoke concessions while that country drafts a new mining law. The move is chilling to companies with tens of millions of dollars invested in projects in the country.
The new mining mandate, passed by the Constituent Assembly on April 15, 2008, limits the number of concessions that may be held by individuals or companies to three. Companies that are affected will have to choose their most promising prospects. The mandate orders the suspension of all exploration and mineral development work at all medium- and large-scale mineral operations until a new mining law is enacted. The new law is to be completed within 180 days. Meanwhile, artisanal and subsistence mining may continue except in nationally protected areas. Also, the mandate orders that concessions granted in 2004 under former-president Alfred Palacios be rescinded. The government says such concessions were improperly granted because local communities were not consulted.
Ecuadorian president Rafael Correa says he wants a new mining law that favours serious entrepreneurs, not speculators.
Meanwhile, several Canadian companies with active exploration project in Ecuador are left to wonder the future holds for them.
ATLAS MINERALS of Calgary admits to being "confused" by the new law and the uncertainty it brings. It is exploring the 100%-owned Tres Chorreas project for molybdenum, gold, copper, silver and rhenium in the southwest part of the country. At the end of last year, Atlas began diamond drilling, geochemical sampling and geophysical work after receiving approval from the government of its exploration environmental impact assessment.
Toronto-based AURELIAN RESOURCES is awaiting the disposition of the three-concession rule. It holds the Fruta Del Norte (FDN) epithermal gold-silver property, the Bonza-Las Penas (Ubwedy) gold-silver property, and 30 gold-silver and 12 copper porphyry targets along the border of Ecuador and Peru. The company says if it has to give up some concessions, the FDN property will be retained as well as two others that it considers to have potential, but it did not name the two.
CHANNEL RESOURCES of Vancouver, citing the anti-mining sentiment that it experienced prior to the new mandate, has decided to defer exploration in Ecuador. Several concessions that it and AZIMUT EXPLORATION applied for last year have already been cancelled.
CORNERSTONE CAPITAL RESOURCES of Mount Pearl, Nfld., is also caught in the uncertainty. That company has several gold and massive sulphide prospects along the spine of the Andres Mountains; some are wholly owned, others are joint ventured. Because its activities must be curtailed, Cornerstone says it must downsize its staff and reduce expenditures in Ecuador.
Vancouver's CORRIENTE RESOURCES is grappling with what the new mining mandate means for it. The Mirador copper-gold project is under development to create an open pit and 27,000-t/d concentrator. The company has two other properties on the verge of development and half a dozen other exploration projects waiting in the wings.
Vancouver's DYNASTY METALS & MINING says it has been invited to meet with senior officials of the Ecuadorian government. Dynasty owns 100% of three gold exploration projects - Dynasty, Zaruma and Jerusalem - in the country. The company had hoped to get the Jerusalem and Zaruma projects into production, but plans are necessarily on hold for a while.
IAMGOLD of Toronto is "closely monitoring the situation", too, and will have more to report in the future. The company owns the advanced Quimsacocha gold project that covers four concessions. At the end of 2007, this epithermal gold-copper-silver deposit was estimated to contain nearly 3.35 million oz of gold. The property was first drilled in the 1970s, and IamGold has been on the scene since 1999.
INTERNATIONAL MINERALS of Scottsdale, Ariz., is examining the impact the new mining mandate will have on two of its projects. The Rio Blanco gold-silver project is currently in the permitting process, and the Gabay gold project is at the preliminary feasibility stage.
OROMONTE RESOURCES of Nelson, B.C., is also wondering what is next for its Ecuadorian holdings. The company has four projects - Chibuza, Marissa, Pangui and Virgen del Cisne - in its portfolio. A fifth property, Nambija, was transferred to CANUC RESOURCES in exchange for shares, warrants and future royalties in October 2007.
Vancouver's SALAZAR RESOURCES is also dealing with the uncertainty of land tenure in Ecuador where it holds four wholly owned projects - Curipamba, Ruminahui, La Aventure and Mendez - covering over 152,000 ha. It is waiting for meetings with the government before knowing the effect of the new mining mandate.
The companies mentioned above are some of those that have already issued news releases concerning their situations. Certainly there are many other Canadian juniors with holdings in Ecuador, and they are facing the same uncertain futures.
Only time will tell if mining reform in Ecuador will finally bring its mining industry into the modern age of production and wealth for its citizens.
CMJ readers wishing to give their Spanish language skills a workout can read the mandate at www.AsambleaConstituyente.gov.ec/documentos/mandato_minero.pdf.
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