Canadian miners hit as Ecuador halts exploration

Fri Apr 18, 2008 6:22pm EDT
 
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By Jonathan Spicer

TORONTO (Reuters) - Aurelian Resources ARU.TO and other Canadian miners with projects in Ecuador saw their shares tumble for a second day on Friday as the South American country voted to suspend their exploration projects for up to six months, until a new mining law with tougher environmental controls is approved.

A special assembly in Ecuador -- which is moving to tighten its grip on natural resources -- adopted a decree on Friday that would freeze mining activity in medium- and large-scale exploration projects, revoke concessions, and leave the companies operating there little recourse.

The assembly's head specifically named Aurelian, along with fellow Canadians Corriente Resources CTQ.TO and Iamgold Corp (IMG.TO: Quote), saying there would be an "immediate" halt to operations.

Miners and industry observers bemoaned the delay, calling the government's move a blow to junior miners, particularly those such as Aurelian with a fat stable of concessions in the Andean country.

"It sends a message that this administration is not fully aware of what mining can do for their economy, and what modern mining is like," said Patrick Anderson, Aurelian's chief executive.

"It's an extremely left-wing faction of the president's party who have an anti-mining agenda," he said in an interview.

Shares of Aurelian, which has the large Fruta del Norte gold-silver deposit in Ecuador, plunged C$2.32, or 31.5 percent, to C$5.04 on the Toronto Stock Exchange, closing at their lowest point in nearly two years.

Aurelian -- which still hopes to bring Fruta del Norte to production in three to five years -- dropped more than 14 percent on Thursday, when Ecuador President Rafael Correa announced he supported the mining halt.   Continued...