MAC: Mines and Communities

Infinito Gold finally files lawsuit against Costa Rican government

Published by MAC on 2014-02-14
Source: Statement, Tico Times

Canadian company Infinito Gold has finally lodged a long-threatened investor-state lawsuit against the Costa Rican government. (See: Canada's Infinito Gold is suing Costa Rica for more than $1 billion). Unsurprisingly, this has been met with cries of protest, not least because it has so far failed to pay legal fees on a previous defamation case it lost.

Meanwhile, Bear Creek Mining has submitted a notice of intent to pursue arbitration to the President of Peru (see: Peru's president-elect vows consultation in bid to end mining conflicts).

Canadian organizations condemn gold company's lawsuit against Costa Rica

Blue Planet Project - Common Frontiers - Council of Canadians - MiningWatch Canada statement

13 February 2014

(Ottawa/Toronto) Canadian organizations are disappointed that Calgary-based Infinito Gold has lodged a long-threatened investor-state lawsuit against the Costa Rican government in the World Bank's International Centre for Settlement of Investment Disputes (ICSID). The company is contesting Costa Rica's legitimate rejection of the proposed Crucitas open-pit gold mine. The groups once again urge Infinito management to drop the unwarranted legal action, accept the will of the Costa Rican people who rejected the mine, recognize the country's 2010 ban on open-pit mining, and leave the country.

"It's outrageous that this firm can't pay its legal fees owing to two critics that it tried to sue for defamation in Costa Rica, but has the funds to sue the country. Public opinion polls in Costa Rica have shown that a majority of the population opposes mining and the Costa Rican court has repeatedly found against Infinito's project. The company should demonstrate some respect and walk away," remarks Jen Moore, Latin America Program Coordinator with MiningWatch Canada.

Although Infinito has lowered its compensation demands from $1-billion to $94 million, the amount of their stated investments in the Crucitas project, even this is unreasonable: Infinito owes $200,000 in legal costs to the professors it tried to sue for defamation, the initial approval for the Crucitas project was declared illegal, and it should not be up to the public in any country to insure mining companies against losses.

"The investment protections in Canadian agreements like its Foreign Investment Promotion and Protection Agreement (FIPA) with Costa Rica or in NAFTA shift the balance of power too far in the interests of multinational corporations. We can draw parallels between the Infinito lawsuit and a similar challenge by Lone Pine Resources to Quebec's precautionary moratorium on hydraulic fracturing under the St. Lawrence River. In both cases, the people should be able to say no to unwanted mega-projects without fear of attracting a costly, time-consuming and unnecessary investor lawsuit," says Stuart Trew, Trade Campaigner with The Council of Canadians.

"We cannot meaningfully talk about sustainable economic development while corporate rights are allowed to supersede human rights and undermine the role of governments to legislate on social, environmental and economic matters in anti-democratic tribunals. We encourage the government of Costa Rica to consider cancelling its investment treaty with Canada in response to the Infinito case, as other Latin American countries are doing, to create a more balanced investment regime," says Meera Karunananthan, Coordinator of the Blue Planet Project.

In December, more than 300,000 people signed a SumOfUs petition that was directed at the company and said: "Costa Rica has the right to protect its rainforests. Drop the lawsuit now."

For more information contact:

Jen Moore, Latin America Program Coordinator, MiningWatch Canada, jen(at), (613) 569-3439
Stuart Trew, Trade Campaigner, Council of Canadians, strew(at), (416) 979-0451
Meera Karunananthan, Coordinator, Blue Planet Project, 613-355-2100, mkarunananthan(at)
Raul Burbano, Program Director, Common Frontiers - Canada, burbano(at), (416) 522-8615


History of Action

December 20, 2013: Groups send a joint communiqué to Infinito Gold, the Government of Costa Rica, the people of Costa Rica, the Government of Canada and the people of Canada.
November 21, 2013: A petition signed by more than 14,000 people is delivered to Infinito CEO John Morgan at an annual meeting in Calgary, Alberta.
October 10, 2013: Joint statement demands "that Infinito Gold respect the will of the vast majority of Costa Ricans, stop its legal intimidation of the people and government of Costa Rica, abide by consecutive Supreme Court rulings against the Crucitas mine and immediately drop its claim at ICSID."
July 4, 2013: Groups mark the Costa Rican supreme court's rejection of Infinito's appeal to a November 2011 court decision annulling the concession for the Crucitas mine.
April 16, 2013: Group send a strongly worded letter to Infinito CEO John Morgan asking the firm to drop its "decade-long harassment of the people and the government of Costa Rica," and withdraw its threat to sue under the Canada-Costa Rica FIPA for $1-billion.

Infinito Gold files lawsuit against Costa Rican government over canceled gold mining contract

Zach Dyer

The Tico Times

10 February 2013

After months of saber rattling, Infinito Gold, Ltd. announced Monday that it had filed for a Request for Arbitration with a World Bank court in its protracted dispute with the Costa Rican government over the canceled Las Crucitas gold mining concession. The concession was revoked in 2010 following environmental concerns and doubts about the concession's legality.

The Canadian mining company seeks to recoup at least $94 million in expenses incurred during the cancelled project's development between 1993 and 2010, plus interest and legal fees, according to a statement released Monday. Originally Infinito Gold claimed $1 billion in lost profits, but the British Columbia-based enterprise has backed away from that number in the lawsuit.

The mining company claimed that Costa Rica violated the Costa Rica-Canada Bilateral Investment Treaty when an Administrative Appeals Court revoked its mining concession in San Carlos, Alajuela, in 2010.

Yokebec Soto, spokeswoman for Industrias Infinto, S.A., the wholly-owned subsidiary of Infinito Gold that managed the Crucitas concession, told The Tico Times that she could not give more details about the case. In a statement, she said the company hoped to reach a "friendly agreement" with Costa Rica during the arbitration.

The Tico Times contacted the Environment Ministry for comment but has not yet received a response. Foreign Trade Minister Anabel González was in Colombia traveling with President Laura Chinchilla on Monday and could not be reached for comment.

Opposed to a previous statement from the company in October 2013, the statement Monday backed away from a hefty claim of $1 billion in lost profits:

The Company emphasizes that, contrary to some media reports, its objective in pursuing its legal remedies is to recoup the costs that have been spent, plus interest, in developing the project over the past 20 years, as opposed to the profits it reasonably expected to earn had it been allowed to fully develop the project.

In 2008, Infinito obtained the concession from President Óscar Arias' administration, but an Administrative Appeals Court later ordered the Prosecutor's Office to open an investigation of the president for signing off on the project when environmental studies were still pending. That case has since been closed.

In November 2010, the appeals court revoked Industrias Infinito's gold-mining concession. The company exhausted its legal recourse in Costa Rica after it lost its appeal in November 2011 with the Supreme Court's Civil and Administrative Law Branch.

In April 2013, the company announced that it would take its case to the World Bank's International Centre for Settlement of Investment Disputes if the two were unable to resolve the issue during the six-month window required under the investment treaty.

An online petition protesting the company's case against Costa Rica has collected more than 300,000 signatures.

Costa Rica's Legislative Assembly unanimously banned open-pit mining on Nov. 9, 2010, weeks before the Administrative Appeals Court issued its ruling against the Crucitas project.

Bear Creek Files Notice of Intent to Arbitrate with Peruvian Government in Connection with the Santa Ana Project; Six Month Consultation Period Begins

Company statement

7 February 2014

VANCOUVER - Bear Creek Mining ("Bear Creek" or the "Company") announces that it delivered to the Peruvian Minister of Economy and Finance, on February 6, 2014, a Notice of Intent to Submit a Claim to Arbitration ("Notice of Intent"), under the Free Trade Agreement between Canada and Peru ("Canada-Peru FTA"). The dispute arises out of the enactment by the Peruvian government on June 25, 2011, of Supreme Decree 032 rescinding the Company's rights to operate the Santa Ana Project and which resulted in a complete stoppage of activities at Santa Ana and significant damages to the Company. Peru's actions constitute violations of the Canada-Peru FTA, Peruvian and international law.

The Notice of Intent is necessary in order to preserve the Company's rights to initiate arbitration should a resolution with the Peruvian government not be reached. The filing of the Notice of Intent also initiates a six-month consultation period between the parties during which time they are to continue to attempt to amicably settle the dispute. If no amicable settlement is reached in that six-month period, the Company may then initiate international arbitration proceedings against Peru in accordance with the Canada-Peru FTA.

Based upon outside counsel's opinion of the strength of the Company's legal position, and ongoing discussions with the Peruvian government and local communities, the Company remains optimistic that a settlement of the dispute in relation to the Santa Ana Project will be reached to avoid international arbitration. The Ministry of Energy and Mines recently issued a public statement that Peru wants to reach an amicable solution through dialogue with the Company. The Company's desire is for both parties to reach a mutually acceptable favorable solution, as evidenced by the numerous proposals submitted by Bear Creek to the Peruvian government to date, with a view to allowing the Company to resume its development of the Santa Ana Project for the benefit of our shareholders, the local communities and the Peruvian nation as a whole. If such a solution is not achieved within the next six months, the Company expects it will have no alternative but to pursue its claims before an international tribunal and seek full compensation for damages the Company has suffered as a result of Peru's acts.

The Santa Ana Project is located in the Puno Region of Peru and contains Proven and Probable Mineral Reserves totaling 63.2 million ounces of silver. Bear Creek acquired the mining concessions in full compliance with Peruvian law, as is confirmed by Supreme Decree 083, enacted by the President of Peru and the Council of Ministers on November 29, 2007. Bear Creek initiated exploration work in early 2008, and undertook a comprehensive Environmental and Social Impact Assessment ("ESIA") shortly thereafter. The ESIA, which the Peruvian government suspended on June 1, 2011, remains on standby. The Company has stated its willingness to complete the ESIA process, including demonstration of social license, and carry out the other steps required to reach commercial production as quickly as possible. The Santa Ana Project, which is widely supported by the local communities surrounding the proposed mine site, will create 2,500 direct and indirect jobs in the southern Puno Region, and bring important infrastructure improvements to the area. The Santa Ana Project is also expected to provide US$330 million in federal taxes, much of which benefit local communities.

Corani Update

The Company's Corani silver-lead-zinc project (the "Corani Project") enjoys continued strong community support, and remains on track for advancement following the approval of its ESIA in September 2013. Numerous public statements by the President of Peru and Cabinet Ministers have expressed strong support for the advancement of the Corani Project and the government has worked in concert with the Company in order to fund local infrastructure projects. However, the successful resolution of the Santa Ana dispute is a critical component to the Company's ability to raise financing for, and ultimately the potential success of, the Corani Project.

Recent media in Peru have reported false accusations by an individual distant from our communities wherein Bear Creek Mining officials supposedly paid locally elected officials based on an alleged document showing an agreement between the company and politicians in the Corani District. The alleged document is falsified from our duly registered, official agreement as disclosed in April, 2013 (see news release dated April 14, 2013). Police in Peru are investigating these claims and Bear Creek has both encouraged and is cooperating fully in this process. We continue to work with our partner communities under the legal agreement executed in April 2013 and for which the Company is extremely proud of its transparent foundation structure that delivers long-term benefits to our communities. This is the only agreement to make social payments to our local communities or its members that exists and, in the interest of transparency; we have posted the agreement in both Spanish and English to the Bear Creek website.

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