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Mining companies react to Ecuadors new Mining Mandate

first_imgMining companies have commented on the new Mining Mandate adopted by Ecuador’s Constituent Assembly on April 18. Glen H. McKay, Chairman of Cornerstone Capital Resources said: “For Ecuador and its mining and exploration business it was not a good day. The unexpected Mining Mandate passed by the Constituent Assembly blindsided the industry, especially considering the many positive signals coming from the Administration earlier, including indications from the Ministry that our long awaited drill permits were soon to be issued.”Some of the major features of the new Mining Mandate that may have an impact on Aurelian Resources are:The new Mining Mandate limits mining companies to holding a maximum of three concessions. Should this apply to Aurelian, the company will retain title to the single concession containing the Fruta del Norte (FDN) epithermal gold- silver deposit, as well as two others that Aurelian believes contain the most prospective geology for additional epithermal discoveries. Aurelian will seek to protect all investments made to date at its other concessions that it has been actively exploring since 2003.The new Mining Mandate invokes an immediate 180-day suspension of activities on virtually all mining concessions in Ecuador while a new Mining Law is drafted and adopted. Aurelian is awaiting formal notification from the Ministry of Mines and Petroleum of the effects of the Mining Mandate on the Company’s operations, as defined in the final provisions of the mandate.In response to this departure from previous indications of support by Ecuador’s government for large-scale mining, Aurelian’s CEO, Patrick Anderson, commented that, as recently as last week, company staff were encouraged by meetings with Ecuador’s Ministry of Mines and Petroleum, where arrangements were made for detailed discussions in the coming weeks on a stability agreement for FDN. “We assume that these discussions toward a stability agreement will be suspended for the immediate future,” Anderson further stated. “While we take some encouragement from President Correa’s continued public statements in support of large-scale mining, this mandate is not in keeping with such expressed support.Nevertheless, we will continue to work with the government of Ecuador to create a long-term sustainable mining industry that benefits investors and other stakeholders in Ecuador. We also expect to continue work on a resource update and a previously announced scoping study for FDN.”Aurelian is seeking further clarification from government officials on how the new Mining Mandate will be implemented and will provide additional commentary as more detail becomes available. An unofficial English translation of the new Mining Mandate prepared internally by the company is available on Aurelian’s website at http://www.aurelian.ca/. Cornerstone’s McKay continues: “We do not know what, if any, changes will be made to the Mandate and the final form of the new mining law.“No doubt there will be many opinions but the fact is that the course of wisdom is to let the dust settle until it is possible to understand fully the new Mandate and to what degree it will be implemented.”Cornerstone, since 2005, has invested about $13 million exploring several highly prospective properties in Ecuador with some very good results. McKay explains: About $10 million of that was funded by JV partners and together we are very interested in preserving the value of our investment. Under the Agreement between the Government of Canada and the Government of the Republic of Ecuador for the Promotion and Reciprocal Protection of Investments we collectively felt confident that our investment in Ecuador would be protected and that should still be the case.“In any event we will be discussing with our JV partners how, in the context of the new Mandate, to preserve title to our best prospects and then prepare for the day when we can move these forward. We understand that the freeze is for a period of up to six months.”Dynasty Metals & Mining says it has been invited to meet with senior government officials, to discuss government policies on mining in Ecuador. “We are reviewing the current Mining Mandate and are analyzing the impact it may have on the company’s future operations, if enforced. We will provide further information after such time.”Dynasty Metals & Mining is a Canadian based mining company involved in the exploration and development of mineral properties in Ecuador. It has two advanced-stage projects, Zaruma, which is nearing production, and Jerusalem, as well as a highly prospective exploration project, the Dynasty copper-gold Belt, which includes the Dynasty Goldfield, the Copper Duke project and the Marianna Joint Venture among other prospects.Corriente has completed an initial review of the new Mining Mandate and says “a number of the articles contained in this Mandate are very unclear and consequently, we are not yet able to fully assess any potential impact on some of our concession holdings in the country. After a meeting with mining sector representatives on April 18, the President of Ecuador, through the Presidential Press, issued a statement clarifying the intent of the Mining Mandate, which states the following:The President of the Republic, Rafael Correa reiterated today that the Mining Mandate seeks to eliminate all the illegal concessions but “it is not suspending the mining activity in Ecuador,” he said.The leader manifested this during the meeting in the Cabinet Hall with several representatives of the country’s mining sector, in which he clarified that, “The Mining Mandate does not impede future concessions, but rather the majority of the current ones that are in a bad state and will have to be reverted in order to grant them later within a new legislative frame”, he explained.Finally, the Head of the State manifested that, “The current dilemma is not to say yes or no to mining, but rather to seek for responsible, economical, social and environmental mining,” he said, after insisting that the position of the Government of the Citizen Revolution is yes to mining, but responsible mining.In March 2008, Corriente was given title confirmation from the Ministry of Mines and Petroleum (MMP) as part of the company’s annual audit process. “This process confirmed that all of our concessions are in good standing. To date, we are not aware of any changes in the good-standing status of our concessions. We are in the process of finalising meetings with the office of the President of Ecuador and the MMP over the next few days to be able to provide more clarity to investors about the intent and potential impact of the Mandate.”Over the last eight years Corriente has invested over C$ 80 Million in its Ecuador projects, using capital provided by investors in Canada, the USA and Europe. “These capital contributions have allowed the company to advance the potential mineral wealth of Ecuador from a very early exploration stage, where almost nothing was known about the geology of southeast Ecuador, to establishing the existence and feasibility of world class copper resources. These resources have the potential to bring billions of dollars in infrastructure development and associated jobs for the benefit of the people of Ecuador. Uncovering the existence of these important copper resources has required years of drilling and engineering studies by our dedicated Ecuadorian team and support from local communities, who realize there can be a better future for their children utilizing the benefits from responsible resource development.”Corriente CEO and President, Ken Shannon, commented, “We believe that the President’s message has been consistent over the last six months. That message is that there is a place in Ecuador for responsible mining and Corriente supports the President in advancing this message. While the Mining Mandate has obscured this message, we do not believe there are any pervasive changes to the President’s plans for mining in Ecuador. Clearly, it is important for the Government of Ecuador to provide greater clarity so that mining companies and their shareholders can believe in the Administration’s plans for allowing responsible mining in Ecuador.Events such as those over the last few days confirm that frontier mining development requires patience and a long-term outlook. We continue to believe that mining can make an important contribution to the future in Ecuador. With over C$90 million in the treasury and an excellent Ecuador-based development team in place, Corriente is well-positioned to continue working with the Ecuador Government in developing a responsible mining industry for the benefit of all stakeholders.”last_img

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