Junior abandons “anti-mining” Panama

Within the mining community, Panamanian President Ricardo Martinelli is gaining a reputation for throwing "curveballs".

On February 11th, Erin Ventures (TSXV:EV), a Victoria based junior miner, reported a mysterious website had surfaced belonging to a company called Mineral Mining PLC. In the website the company claimed to own a number of mineral properties that were already owned by Erin Ventures; namely, the Santa Rosa Mine in Panama. In fact, at the time of publication, some of the information on the company’s website appears to have been taken directly from Erin’s website. Without their knowledge, Erin Venture’s mineral concessions for the Santa Rosa Mine in Panama had secretly been awarded to a third party, despite the company’s claims to the assets.

Today, Erin Ventures General Manager Blake Fallis reported that, in the opinion of Erin’s management, there is clear evidence of inappropriate actions by certain government departments giving this third party an improper and unfair advantage in the concession process. In light of these developments, and coupled with what Fallis describes as an “anti-mining” attitude developing within Panama, management felt it was prudent to abandon all activities in Panama until further notice. Shares of Erin Ventures closed down half a penny today at $0.10 on a half a million shares of volume.

On March 3rd, 2011 Panamanian President Ricardo Martinelli asked lawmakers to repeal a recent law that allows foreign government investment in mines within the country. Martinelli, who originally championed the new law, made the surprise announcement about the repeal during a meeting with the Ngabe-Bugle, an indigenous community in Western Panama. To say the group strongly protested against the legislation is an understatement: “Down with mining! The Ngäbe-Buglé people will fight with their lives to prevent the exploitation of mining! Murderers!” was their reported war cry. The following is a report from TeleSUR at the time of the protests – habla español?

The day after the repeal was announced, Inmet Mining (TSX:IMN) was the biggest loser on the TSX. Share gave back 7.4% or $5.12, to close at $64. The law, which was passed just a month earlier, was considered crucial to the company’s plans to partner with Singapore’s state investor Temasek and with Korea Resources Corp. to finance and build its $4.3 billion Cobre Panama copper-gold project in the country. Then on March 22nd, 2011 the company was thrown another curveball when the Panamanian government rejected Inmet’s plan to use coal-fired power at its proposed Cobre Panama mine site. This decision effectively derailed Inmet’s planned merger with Lundin Mining (TSX:LUN).

Fortunately for Inmet, on March 24th the company received a letter from the Panamanian government confirming that its copper-gold project will not be affected by the recent repeal. The statement said the repeal  “does not affect the contracts or concessions granted to companies to develop metallic or non-metallic mining projects in Panama.” But in the eyes of many investors the damage was already done. Shares of Inmet have yet to fully recover.

President Martinelli, who founded Panama’s Super 99 supermarket chain, cast himself as a right-of-center counterweight to Hugo Chavez, the radical Venezuelan leader. Recent US government State Department cables that were exposed on WikiLeaks were not at all kind to Martinelli. They describe him as a man of “limited attention span” who “makes strong impulsive decisions with minimal information.” The documents cast him as a vindictive authoritarian, a sentiment that is almost certainly shared by certain members of the mining community today.

Mike Luft

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