The mandate caught Canadian mining companies that have projects in Ecuador by surprise, and their share prices initially tumbled. Ecuador currently has no metalproducing mines of consequence. However, in recent years, it has attracted significant exploration spending, and several projects offer promise of substantial future production.

Following announcement of the mandate, statements by government spokespeople tended to be conciliatory. On April 24, eight Canadian companies (Corriente Resources, Iamgold, Aurelian Resources, Cornerstone Capital Resources, Dynasty Metals & Mining, Ecometals Ltd., International Minerals Corp., and Salazar Resources) met collectively with Ecuador’s President, Rafael Correa; the Minister of Mines and Petroleum, Galo Chiriboga; Deputy Secretary of Mines, José Serrano; and other presidential advisors on politics and business to discuss the mandate and the future of mining in Ecuador. Canada’s Ambassador to Ecuador, Christian La- Pointe, accompanied the companies and presented the concerns of the Canadian government for a fair, stable, and long-term investment environment in Ecuador.

Following the meeting, a Corriente press release said, “The companies welcomed President Correa’s repeated statements that responsible mining will go ahead in Ecuador. He said that the purpose of the Mining Mandate was to allow the government to get its house in order and new mining laws in place so that responsible mining can proceed.” The president invited the mining companies to meet with the Ministry of Mines and Petroleum to help formulate the new mining laws, starting April 28. On May 9, Bloomberg reported that Deputy Secretary Serrano said in an interview that the government had set a goal of restarting major project development activity by late August, two months ahead of the 180-day deadline set by the mandate.

Corriente controls a 100% interest in approximately 62,000 hectares on the Corriente copper belt in southeast Ecuador, where it has identified four copper and copper-gold porphyry deposits—Mirador, Mirador Norte, Panantza and San Carlos— as well as six additional copper exploration targets. The company has invested C$80 million in project development in Ecuador and is moving toward construction of an open-pit starter operation at Mirador. An updated feasibility study for the starter project released in early April 2008 calls for production of an average of 137 million lb/y of copper, 34,000 oz/y of gold, and 394,000 oz/y of silver during the first 10 years of the mine’s life. Mill throughput is planned at 30,000 tpd. Construction would require two years. Initial capital cost is estimated at $399 million.

Iamgold is the only company among the eight that is a current producer. The company has gold mines in Canada, Ghana, Mali, Botswana and Suriname. In Ecuador, it has been drilling its 100%-owned Quimsacocha project since 2002, and in October 2005, it announced discovery of a multi-million-ounce resource. Completion of a pre-feasibility study had been planned for the end of the second quarter of 2008. In a March 2008 project update, Iamgold said it had budgeted more than $11 million for 2008 spending at Quimsacocha to complete the pre-feasibility study, for continued exploration on the company’s land package, and for advance work on a full feasibility study, with a potential for commercial production by 2012.

Aurelian Resources discovered the Fruta del Norte gold-silver deposit on its wholly-owned Condor project in Ecuador in April 2006. An initial Inferred Resource for the deposit was released in October 2007, totaling 58.9 million mt grading 7.23 g/t gold and 11.8 g/t silver and containing 13.7 million oz of gold and 22.4 million oz of silver. Following announcement of the Mining Mandate, Aurelian suspended all drilling activity on the project and reduced its workforce by 80% but continued to move forward with desktop mine and project planning and with resource updates to “ensure that we can hit the ground running once a new mining law is in place.”

The other companies among the eight that met with President Correa on April 24 are pursuing a variety of projects at various stages of drilling and development.

Share prices of the companies involved recovered somewhat following their initial fall; however, as of mid-May, the likely details of the new mining law remained unknown. Expectations were that the new law would incorporate new royalty and tax rates, a provision limiting the number of concessions that can be held by an individual or company, a new environmental regulatory regime, and new regulations regarding social and community issues.