Location Can Make or Break Mining Companies

Government intervention has moved to the forefront for both investors and mining companies recently as political risk in places like Labrador, Romania, Venezuela and Ecuador have had a major impact on operations there.

In Romania, progress on explorer Gabriel Resources Ltd.’s (GBRRF.PK) Rosia Montana gold and silver project has come to a standstill after the government rejected its environmental impact assessment in September 2007. The shares have lost roughly 60% of their value in the past year.

In Ecuador, it was the approval of a surprise mining mandate that limits the number of mining concessions companies or individuals can hold that has punished names like Corriente Resources Inc. (ETQ), Aurelian Resources Inc. (AUREF.PK) and Dynasty Metals & Mining Inc. (DMMIF.PK).

And then there is Crystallex International Corp. (KRY), whose shares have also plunged nearly 60% in the past 12 months. The emerging gold producer’s Las Cristinas property in Venezuela is expected to commence production in 2009 at an initial rate of 300,000 ounces annually, according to Canaccord Adams analyst Wendell Zerb. But while the company said in June 2007 that the requirements of its environmental permit had been fulfilled, continued development and production require receipt of the permit, which has not happened.

So while political risk is no joke for those with mining interests in these locales, Canaccord tried to lighten the mood a little in its Junior Mining Weekly:

Ecuador and Labrador?

Your cash is better in a drawer

Try it, try it could be fun

No, second thought, run run run.

Mongolia, Bolivia, Venezuela

What an idea

Take all the risk

Get nothing in the sack.

You got to believe we’re not coming back.

Mr. Zerb reminded clients that there are three factors that can make or break a mining company: “location, location, location."

Comments

[WAKEUP]

What, they forgot the fine old art of BRIBERY? And they call themselves mining companies! Harrummpphhh !

[xander]

the dems passed a law that makes it a crime to pay bribes to foreign extortioners.

[investorslive]

KRY ouch today eh? we are trading it in chat -- crazy!!
www.investorslive.com/.../

[baynetin4hd]

wonderful poem, tickled my funny bone in a very strange,no very wierd way. (as I read KRY news release on 4-30-08) call me "Butt Hurting Stockholder"