ARGENTINAPublished by MAC on 2006-12-20
Governor Vetoes Mining Ban in Argentina's Mendoza Province
By Jon A. Nones, ResourceInvestor.com
20 December 2006
ST. LOUIS -- The Governor of Mendoza Province has vetoed legislation passed by the Mendoza Provincial Congress on December 13, 2006 to suspend new exploration and mining permits pending a new environmental law.
According to a press release by Exeter Resource, currently exploring in the province and developing the La Cabeza project, the Governor determined it to be unconstitutional because "the older provincial legislation upon which it was based was inconsistent with, and had been superseded by, more recent comprehensive Federal environmental and mining legislation."
The Department of Environment in Mendoza is still proceeding to finalize a new environmental management plan, designed to protect the interests of the province and various land users. The plan will include a land use map setting out priorities in Mendoza Province for parks, nature reserves, agriculture and mining.
Exeter said that government officials have assured the company that its La Cabeza project will fall in an appropriate mining area, and the project has the full support of the Malargüe Departmento for exploration and mining.
La Cabeza reports Indicated Resources of 6.2 million tonnes at an average grade of 2.0 g/t Au for 390,000 ounces of gold. Estimates of Inferred Resources hit 500,000 ounces of gold from 12.1 million tonnes at a grade of 1.3 g/t Au with a cut-off grade of 0.5 g/t.
Currently, the company has five drills in operation with a new resource calculation to begin in early 2007, followed by an update of scoping studies and a final feasibility study expected during the second quarter of 2007.
Yale Simpson, Chairman of Exeter, previously told RI that mining is new to the area and the province is just setting up "necessary guidelines."
Exeter stock is up 5% so far today at $2.05 on AMEX. But shares in the company were hit hard after the initial announcement, dropping 23% from $2.32 on Monday.
The company commented on the market activity, saying the share selloff was "exacerbated by third party speculation" that the new legislation could result in a suspension of all current mining activity in Mendoza.
Exeter said that even if the Governor did not veto the legislation, the proposed suspension would only have applied to the grant of new licences and not La Cabeza.