Ecuador, Kinross Continue Talks For Deal For Fruta Del Norte
11 Abril 2012 - 12:46PM
Dow Jones News
Canadian gold mining company Kinross Gold Corp. (KGC, K.T) and
the Ecuadorian government are continuing negotiations for a deal
that will allow the company to mine the Fruta del Norte
deposit.
President Rafael Correa and Kinross chief executive Tye Burt are
planning to hold a meeting in Quito, officials say.
Fruta del Norte, located in Zamora Chinchipe province, is the
largest gold deposit in Ecuador. It has proven and probable mineral
reserves estimated at 6.8 million ounces of gold and 9.1 million
ounces of silver.
"There is still no confirmed date for the meeting, but we are
working on it and hope it will be soon. It will depend on the
schedules of both people," Kinross's vice president in Ecuador,
Dominic Chaner, told Dow Jones Newswires. "Talks continue and there
is a very good working environment."
Ecuador expects to start large-scale mining production in 2014,
eventually allowing it to become one of the Andean nation's biggest
sources of revenue.
However, negotiations with mining companies to sign contracts to
allow production are more complex than expected due to the
government's decision to obtain more than 50% of mining revenues,
including annual royalties and several taxes.
In early December, Kinross and the government reached an
agreement for Fruta del Norte, which, among others, established the
government's share of project economic benefits at a minimum of
52%, including royalties and taxes.
However, in February the government announced that the final
contract might not go through due to the company wanting to
renegotiate the terms of the agreement.
Chaner expects that a "fair and balanced deal" between the
Ecuadorian government and Kinross will be reached at the latest by
June.
Last month, Ecuador signed a 25-year contract with
Ecuacorriente, a company controlled by the China Railway
Construction Corp. (601186.SH, 1186.HK) and the Tongling Nonferrous
Metals Group Co. (000630.SZ) for the Mirador copper project, with
about five billion pounds in recoverable reserves of copper.
The Chinese companies also own the Panantza-San Carlos copper
project, near the Mirador.
According to official data, five projects that the
administration of President Rafael Correa considers highly
important will involve an investment of about $8 billion over four
years for the construction of the mines and production
facilities.
Those projects include Mirador, Fruta del Norte, Panantza-San
Carlos, and Rio Blanco and Gaby.
Rio Blanco and Gaby projects are operated by the local unit of
International Minerals Corp.'s (IMZLF, IMZ.T).
An study from the private Council of Responsible Mining, or
Conmin, said that the five strategic projects could generate annual
sales of $2 billion when they all reach production stages, possibly
in about five or six years.
The study added that Ecuador has a potential of 35 million
ounces of gold, 70 million ounces of silver and eight million tons
of copper.
-By Mercedes Alvaro, Dow Jones Newswires; 5939-9728-653;
mercedes.alvaro@dowjones.com
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