Colombia may not be as well known for mining as some of its more established neighbors in South America such as Chile and Peru, but recently, two TSX listed gold miners, Greystar Resources (TSX:GSL) and Ventana Gold (TSX:VEN) have done their best to bridge the historical gap.
Greystar has been trying, largely in vain, to gain support from local residents and officials for its Angostura gold project near Bucaramanga, in the Colombian province of North Soto. But on March 4th, during a public hearing on the project held by the Ministry of Environment, Housing, and Territorial Development, confrontations resulted in the early cancellation of the hearing after only 28 of the inscribed 470 statements had been heard.
Steve Kesler, Greystar’s President and CEO said “The spirit of respectful dialogue necessary to understand concerns so that they can be addressed was missing at this hearing. Clearly there are divisions within communities and within authorities on this project. Greystar will only develop a project with the support of both.”
Meanwhile, at the Prospectors & Developers Association of Canada (PDAC) conference in Toronto that wrapped up yesterday, Colombian mining minister Carlos Rodado Noriega told reporters the environmental study on the Angostura gold project is not acceptable and Greystar may be required to rethink the project design. Greystar had proposed developing Angostura as an open-pit mine using a heap-leach process, in which a cyanide solution is used to extract the ore.
Shares of Greystar fell from $3.97 on March 1st to a low of $2.55 yesterday, before gaining back $.31 cents to close at $2.86 today.
The news from Colombia has been better for shareholders of Ventana Gold. On November 17, 2010 Brazilian conglomerate EBX Group announced an all-cash offer to acquire all of the issued and outstanding common shares of the company at a price of $12.63. EBX Group is controlled by billionaire Eike Batista, currently ranked as the 8th richest man in the world by Forbes Magazine.
Ventana’s board was clearly hoping another suitor would emerge when they rejected a $1.2-billion hostile takeover and hired Goldman Sachs and TD Securities to dig up other options. When no other buyers immediately stepped up the company caved and, in February, began negotiating a friendly takeover.
At the time, Loewen Ondaatje McCutcheon analyst Michael Fowler commented, “I think it’s a low bid, but it’s obvious that they haven’t got anyone else at the moment.”
With no other bids on the horizon, Ventana seemed to be negotiating from a position of weakness. But the board managed to add a small premium to the initial offer, receiving a $13.06 per share offer, from AUX Canada Acquisition, one of Batista’s companies. Shares of Ventana were as low as $6.44 last summer.
According to Ventana Chairman Richard Warke, Batista is intent on building a gold company focused on Latin America. Ventana’s La Bodega project lies next to Greystar’s Angostura project in Colombia. While some may speculate the potential for a consolidation in the region is now higher with one of the world’s richest men entering the scene that feeling is clearly being tempered by the difficulties faced by Greystar.