Aurelian and Corriente Shares Down as Equador Suspends Mining Exploration

Aurelian Resources Inc. (AUREF.PK) shares were down another 18% in early trading Friday morning after the company was blindsided by news that Ecuador plans to suspend mining exploration in the country until a new mining law is passed. On Thursday, when news of the suspension plans first surfaced, the stock fell 8%.

Aurelian is developing the Fruta del Norte mine, a massive gold resource in Ecuador. Shares in Corriente Resources Inc. (ETQ), another Canadian miner with interests in Ecuador, were also down, falling 9% or C$0.42 to C$4.18.

Comments

[VintonCounty:]

This illustrates the main risk to mining companies: thieving governments. Mining companies must operate where the minerals are, and they must invest much capital in mine development. If the host government then imposes high royalty/tax or seizes majority interest at dictated price, the miner can't afford to leave. All it can do is avoid that country in the future, but that can cause missed opportunities. A country's government can swing from honest to pirates to honest again to pirates again during the long lifetime of a mine. This can make a small miner insolvent. Conclusion: big miners are safer.

2008 Apr 21 04:41 PM

[jock:]

If companies negotiate hard and get a better deal for themselves, that's good. If governments do so, it's "thieving"?

Ecuador (that's how it's spelled, btw) has suffered massive public health and environmental problems from Texaco and successor oil operations.

Don't they have a right to decide how and when they allow large-scale mining to begin? -

BTW, I have a position in Aurelian, and feel the current pain !

2008 Apr 21 05:03 PM

[NOWHEREMAN:]

This is global not specific....Mongolian Government wants more...Anywhere and everywhere, the have nots with resources now have leverage.

They have access to the internet...they see how others live...they want it all. Some want it now.

2008 Apr 21 05:13 PM

[KBowen7736:]

Negotiating a contract is fair game but all these exploration companies spend investors money based upon an anticipated taxation level by the host government due to historical data. If the country intended to charge higher taxes on a particular claim then that should have been known by all before the first dollar is spent.

That is how it should go and how it did not go in Ecuador. Thieving bastards is the correct term here!

2008 Apr 21 08:09 PM