Professional Documents
Culture Documents
56 / April 2016
3 When Ulloa
Met CGL 4 Sports
Desk 5 Mining
Conflict 6 Cerro
Quema
C
olombia could experience a dram-
atic cessation of mining and explor-
ation investment as it faces an in-
creasing number of international
lawsuits for its failure to protect and hon-
our the acquired rights of mining con-
cession holders.
Seeing its acquired rights being whipped
away, Eco Oro Minerals (TSX: EOM) inform-
ed the government of the existence of a
dispute in March under the terms of the
Free Trade Agreement (FTA) between Can-
ada and Colombia. The company claims
that government measures and omissions
have directly impacted the rights granted to
it to explore and exploit its Angostura
project in Santander.
EOMs announcement was met be a
Image: Rene Elkin
Feature
Show us your mettle Which way will President Santos turn in the face of international lawsuits?
With the Constitutional Court stating that
acquired rights must be stripped away for 2009 but it was never granted until Sept 16 Colombia has been on the losing side of a
the greater good, Colombia will have to and only signed on 29th October, the same decision in a territorial dispute with Nicar-
show the world exactly what type of county day that a resolution creating the Yaigojé agua before the International Court of Jus-
it is. Article 58 of its Constitution provides Apaporis Park was published. “The sub- tice (ICJ) in The Hague that has seen it lose
that there shall be no expropriation of stantial delay was clearly for the improper economic and territorial rights over a part
property rights without compensation. “In purpose of foreclosing the legal grant of the of the Caribbean Sea.
circumstances when the government be- mining concession,” states the suit. This has ignited a wave of nationalism
lieves that an acquired right must be sacri- CSG claims falsification and the creation and public opinion is all for being more ins-
ficed for the greater good, it has the right to of fraudulent records by government offi- ular and questioning the benefit of being a
expropriate such rights with opportune, fair cials and seeks US$16.5B compensation signatory to international agreements, with
and complete compensation,” said the law based upon the value of the Fe and Au de- the law suits filed under international ag-
firm partner. If the Constitutional Court posits underlying the concession and reements framed in the media as a chall-
eliminated any acquired right, that would US$11M for costs accrued in preparing the enge to the country’s sovereignty.
amount to an expropriation of such rights site and obtaining the mining lease and President Santos will be under pressure
and the state should have to compensate payments made to Colombia. “The place- to protect Colombia’s sovereign rights and
the title holders. Eliminating such rights ment of the Yaigojé Apaporis Park over the also to limit its future exposure. The experi-
without compensation, would be a con- Taraira South mining concessions was an ences of EOM or CSG are not isolated and
fiscation. Expropriating with compensation illegitimate taking, both founded in fraud there are many companies—and one can
versus confiscating without compensation and without compensation,” says the suit assume—specialist international lawyers,
is the difference between rule of law and, “the course of conduct of Colombia, as waiting in the wings to file suit or negotiate
countries and lawless countries, such as witnessed through its agencies, courts, and compensation depending upon how these
Venezuela, where rights of many people in representatives, makes clear that fair oppo- cases pan out.
several sectors were terminated without rtunity before the law and due process of President Santos is concurrently seeking
compensation. The result to the economy law are not available.” international support for the peace deal his
and to the country as a whole is plainly
clear,” he continued.
The Colombian government spent much
of this millennia inviting the mining sector
to Colombia and the sector came but many
The course of conduct of Colombia, as witnessed through its
companies found that claims of legal stabil- agencies, courts, and representatives, makes clear that fair
ity and the rule-of-law do not concur with opportunity before the law and due process of law
their experience on the ground. are not available
With exploration companies having fail-
ed to find succour with the government
following years of delays and uncertainty, it Swiss miner Glencore, a shareholder in government is negotiating with the FARC
is a fair bet that the number of companies the Prodeco coal mine, filed a demand guerrilla, both in terms of international
seeking international arbitration will increa- against Colombia under its FTA with Switz- economic aid to help pay for the peace,
se and Colombia is likely to see more of this erland as a result of a fine Prodeco received plus for Colombia to be left alone to decide
action in 2016 than exploration. from the Comptroller General for non-per- how to handle the FARC leaders, many of
Cosigo Resources (TSXV: CSG) and To- formance of contractual obligations. In add- whom have international arrest warrants
bie Mining & Energy (private) filed suit in ition, Mexican magnate Carlos Slim’s Amer- for terrorism and/or drug-trafficking. The
February under the rules of arbitration of ica Movil company will seek compensation distaste of internationalism will only grow.
the UN Commission on International Trade under the FTA with Mexico for an alleged Having missed the March 23rd deadline for
Law claiming wrongful expropriation with- rule changing in the telecoms sector. a peace deal other things on the govern-
out compensation, of its Taraira South con- ment’s agenda are starting to bunch up,
cession in Vaupes. In the suit, the plaintiffs including a tax reform that is expected to
state that their application for a concession Internationalism sours see it implement changes to assuage the
contract received both technical and legal Contextually, this comes at a very interest- credit ratings agencies to avoid a country
approval from the government by April ing moment for the country creating a dil- downgrade. CGL
emma for President Juan Manuel Santos.
© 2016 Colombia Gold Letter. All Rights Reserved. 2
@ColGoldLetter No.56 / April 2016
Feature
E
cuador has made great strides to put
itself back on the mining map. CGL
talks with mining minister Javier
Cordoba.
Feature
S
cene: The rooftop terrace at the
Thompson Hotel at the PDAC party
hosted by Red Eagle Mining.
Panning shot as Carmen Sylvain, Can-
ada’s Ambassador to Colombia, enters from
stage left and, clearly expert at working the
floor, approaches two people and greets
them with the stock-in-trade, “hello. Who
are you and what do you do?” which she
followed up with, “What do you think are
the problems with mining in Colombia?”
Close-up on the face of the hero/villain
(delete as applicable).
CGL There is not enough time to answer
that.
Photo: Everett Collection
P
resident Juan Manuel Santos sacked
accepted the resignation of yet an-
other mining & energy (MinMinas)
minister during the PDAC as Tomas
Gonzalez became the latest head to roll out
of that office.
President Santos was reportedly not in
agreement with the resignation (but he
accepted it anyway) and handed temporary
control of the ministry to the minister of
the presidency María Lorena Gutiérrez.
Gonzslez claimed his resignation was
due to the energy crisis facing Colombia
Image: JC Nowers ; Photo: El Tiempo
Feature
Mining Conflict
By Don Clarke, General Manager, CES
donclarke@black-river.ca
A
s a result of the mining boom and
an ever-increasing global appetite
for metals mining companies ven-
tured into non-traditional mining
jurisdictions and have not only discovered a
bonanza of new deposits, but they have
also encountered a wave of unprecedented
social opposition and conflict. As a result of
working in higher risk non-traditional min-
ing jurisdictions, coupled with the growth of
social media and anti-mining transnational
NGOs conflict for miners is not likely to go
away anytime soon. My experiences and
research show that social conflict is often
not just against a mining project, as there
Photo: The Northern Miner
Project Report
Cerro Quema
Analysis Future Catalysts
High-grade Au High-grade Au Final permit soon
T
he wind blows across the platform constructed to host deforested decades ago by cattle ranching, a sector that is suffering
much of the mine infrastructure for Pershimco from the drought that El Niño has brought, and that the ranchers
Resources’ (TSXV: PRO) Cerro Quema project in Panama’s themselves have amplified across most of the peninsula by cutting
Los Santos province, rattling the board where the down the trees.
development plans are posted as CEO Alain Bureau gives an Understanding that water is a crucial issue for local comm-
orientation to the future mine site. unities, one of the first acts of the company when it obtained the
Located between what will be the initial pits, the La Pava and project in 2009 was to start building sedimentation traps on the five
Quema orebodies, Bureau highlights the close proximity of the ore drainages from its project area so that eroded soils would not enter
bodies to the platform where the infrastructure will be built and and cloud the Quema river. “We built these with the people and
overlooking where the company sees future exploration resource explained to them what they were for. People working to protect
growth that will bring a much needed boost to the local economy. their environment generated enormous civic pride and generated a
The project area is surrounded by barren-looking hills that were lot of support for the project as they could see that we cared about
the environment too,” he said.
Financial Model (US$1,275/oz Au) The region could clearly benefit from the mine’s development
both economically and environmentally, with the mine develop-
NPV (5%) US$121.7M ment providing an opportunity to reforest some of the denuded
hills and reestablish vegetation that would help maintain water
IRR 41.4%
sources and prevent erosion.
CAPEX US$94.7M A recent PFS optimization saw the company opt for contract
mining, to bring down capital costs to US$95M from US$117M and
AISC OPEX US$652/oz in the process, boost the project’s internal rate of return from 23%
Project Report
and indications of a copper porphyry at depth as evidenced by Cu-
Au-Mo in some of the deeper holes drilled (see photo below).
Indeed, copper is likely to be the long-term future of Cerro
Quema once the gold oxides have been mined, which is partly why
the company recently acquired a package of concessions held by
Bellhaven Copper & Gold (TSXV: BHV) directly NW and along strike
from Cerro Quema. “We need to show that the copper element is
real so it is important to keep advancing this,” he said.
Exploration of the underlying copper potential will take time and
money and is something that will be tackled in earnst once cash
starts flowing from gold production. If PRO is able to define an
economic copper orebody, the next question will be who would
mine it? Would that be the time for PRO to be taken out by a larger,
copper specialist company? CGL
Exploration upside
PRO is confident that exploration will identify much more ore in the
future to extend the mine life and its geologists are ready to
commence a two-phase 20,000m drilling campaign to test several
targets identified through geophysics and mapping at Idaida, Cerro
Caballito and La Pelona targets. “There is not just five years mine life
here but something much bigger,” says Bureau. “We need to get
cash flow positive to be able to continue exploration without
depending upon the market and fund-raising.”
VP Exploration John Kapetas is also planning a 30 line kilometer
ground IP programme over regional Au-Cu targets that is just
waiting for a decision to proceed. “The production story that brings
cashflow allows us to go into a much larger exploration pro-
gramme,” says Bureau.
In addition to the Au oxide, there is a high-sulphidation system
Drill core showing the transition from Au-bearing oxides to Cu-bearing sulphides
Exploration News
Cosigo Resources (TSXV: CSG) Angostura project in Santander. These include the government’s
Together with Tobie Mining & Energy filed suit against unreasonable delay in clarifying the limits of the Santurban Paramo
Colombia under the rules of arbitration of the UN Comm- and whether it overlapped with Angostura, and its persistent failure
ission on International Trade Law (UNCITRAL) claiming wrongful to provide clarity as to EOMs right to continue developing its mining
expropriation, made without compensation, of its Taraira South project in light of further undefined requirements and later as a
concession in Vaupes. The suit states that CSGs concession consequence of the February Constitutional Court decision, which
application received both technical and legal approval from the broadened the prohibition of mining activities in paramo areas.
government by April 2009 but it was never granted until 16th Sept EOM is open to continue amicable discussions with the government
2009 and only signed on 29th October 2009, the same day that a regarding settlement of the dispute, but if an acceptable settlement
resolution creating the Yaigojé Apaporis Park was published, and cannot be reached during the next six months, EOM may submit the
even after the park was created the National Mining Agency dispute to international arbitration and seek a declaration of a
continued to receive annual canon payments. “The substantial breach of the FTA and monetary compensation.
delay was clearly for the improper purpose of foreclosing the legal
grant of the mining concession,” states the suit.
The suit continues that the special administrative unit of Na-
Atico Mining (TSXV: ATY)
Will undertake a 5,000m underground drilling campaign
tional Natural Parks of Colombia started a prior consultation in 2016 at its El Roble Cu mine in Chocó to infill and
process as the mining concession approvals were being reviewed explore the northern extent and downdip of the Zeus orebody. In
that took no more than 20 days and contained many errors or addition, it will undertake a 2,000m regional drilling campaign to
deficiencies that it says violates various articles of ILO 169 (relating test one or two targets that exploration has identified. The com-
to prior consultation of indigenous communities). CSG claims falsi- pany has paid down a significant part of its US$12M long-term debt,
fication an creation of fraudulent records by government officials with the amount outstanding as of February being US$6-8M. The
and seeks US$16.5B based upon the Fe and Au deposits underlying company intends to pay down more debt throughout 2016 as there
the concession and US$11M for costs accrued in preparing the site are no early payment penalties for doing so.
and obtaining the mining lease and payments made to Colombia.
“The placement of the Yaigojé Apaporis Park over the Taraira South
mining concessions was an illegitimate taking, both founded in Batero Gold (TSXV: BAT)
fraud and without compensation,” says the suit, and, “The course of Reported results from 11 holes drilled at the La Cumbre
conduct of Colombia, as witnessed through its agencies, courts, and deposit at its Batero-Quinchia project in Risaralda.
representatives, makes clear that fair opportunity before the law These holes represent 36% of the company’s planned 2015/2016
and due process of law are not available.” infill drill programme. La Cumbre near surface drill highlights
include: 106.9m @ 1.47 g/t Au & 2.34 g/t Ag in hole DDH-ZO-011
Eco Oro Minerals (TSX: EOM) and 22.3m @ 1.19 g/t Au & 1.25 g/t Ag in hole DDH-ZO-004. The
2015/2016 infill drill programme was initiated after receipt of a gap
Notified the government of a dispute under the FTA be- analysis from Heap Leach Consulting outlining steps required to
tween Canada and Colombia. EOM says the dispute has move towards a production decision on the higher grade central
arisen out of the government’s measures and omissions that have portion of La Cumbre. Prior to drilling, 9,593m of drill core were re-
directly impacted the rights granted to it to explore and exploit its
Exploration News
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