MAC: Mines and Communities

Patagonia: where silver loses its shine

Published by MAC on 2009-11-17
Source: Associated Press, Financial Post, Chubut Diocese (2009-10-22)

Already one of the most significant producers of the shiny metal, Pan American Silver Corp is about to acquire the Navidad deposit in Argentina's Chubut province.

This will propel the US company a long way towards becoming "the world's largest and lowest cost primary silver mining company." 

But that achievement will come only at an unacceptably high social and environmental cost, according to provincial church  leaders. See: http://www.minesandcommunities.org//article.php?a=8838

ESPAÑOL

Worries about Open-Pit Mining in Chubut

Statement by Comodoro Rivadavia (Chubut), Bishop Virginio Bressanelli

22 October 2009

Confronted with stories of a possible increase in mining exploration and operation in our province, Chubut, the Comodoro Rivadavia Bishop, together with the Social and the Indigenous Diocese Commissions, address the Provincial Government, the Legislature, the Judiciary, the Ecclesiastic community, and Chubut’s communities and institutions to express our position, our worries, and our proposals.

We are not against mining in and of itself, which in certain conditions and with certain technology, provides us with many goods necessary for the country’s economic and social systems. We oppose mega-mining or open-pit mining, with the use of explosives and toxic inputs, whose polluting power and waste production cause devastating impacts on natural resources, such as water, the soil, the air; essential resources for human life and its adequate development in harmony with nature; goods to which every person and every generation, current as well as future, has a right.

We are worried by:

The excesses committed by mining companies in recent times, especially in poor and developing countries, gravely damaging their biodiversity and natural balance through the elimination of forests, environmental pollution, and the conversion of exploited lands into immense deserts. We don’t want that to happen in our province.

A large scale mine requires the indiscriminate use of millions of liters of water.

Water must be recognized as a basic and essential human right, indispensable to supporting life.

Water must also be recognized as a right which rural, as well as urban
populations, are lacking, affecting their activities and their lives.

In fact, in the surroundings of the Navidad Project, the lack of water became evident this year when springs and wells reduced their flow and even dried up, something that in local memory had never happened - even in the worst droughts.  Because of this, water had to be delivered by truck from Gan Gan to Lagunita Salada from January to May.

Mining that uses lixiviation with toxic chemicals (cyanide, mercury, etc.) to increase profitability, [after] grinding tons of rock, leaves a long-term environmental threat with a destructive impact on human health and the health of other living creatures, which are necessary to maintain natural water sources, soil creation, and environmental stability.

More than anything else, we are worried by the creation of acid water (AMD = Acid Mine Drainage) that attacks many organisms and whose effects are difficult to undo because they set off a chain reaction that lasts decades or centuries.

Mining affects the rights of indigenous communities, altering their habitat, putting at risk the base of their subsistence, centered o goat and sheep herding; hurting their culture which is characterized by “respect for nature and love for mother earth, source of life, common house, and altar of human sharing”.  The National Constitution (Art. 75, par. 17) as well as the provincial constitution (Art. 34) establishes “[indigenous people’s] participation in the management of natural resources and in other matters that affect them”.

Convention 169 of the International Labour Organization (ILO), regarding Indigenous Peoples and Tribes in Independent Countries, approved by National Law 24701/1992, protects their right to collective existence, to cultural identity, to their own institutions, and to participation.

In its articles 6.1.a, 6.2, 15.2 it charges states with the duty to consult indigenous peoples, prior to studying, planning, or carrying out any measure which directly affects them. They should be protagonists of their own future and the destiny of the lands they use. As such, so they can freely decide and be consulted responsibly, they should be exhaustively informed regarding the extent and risks of mining activity in the communal territories and neighboring lands.

Mining would provide sparse economic benefits to the province (and the nation), while eliminating non-renewable natural goods that are given away as raw material and later bought as industrial goods.

Who will assume the consequences of the environmental impact and the responsibility for depriving future generations of resources that belong to them?

At the same time, there is no significant increase in employment, direct or indirect, created by mining.  This is true because this activity, always guided by the criteria of maximum profit, is short-term, of rapid and intensive procedures, and very technical (work from which the local population is excluded, or limited to less important tasks).

The infrastructure works related to mining (rural electrification, roads, transportation) which benefit the population as well as mining companies, are frequently paid for by the State.

The social work that these companies promote during their stay constitutes only a minimal return of everything they take, without great humanitarian significance.

We wouldn’t want the final result to be the appearance of ghost towns and arid lands, unhealthy and inhospitable.

Mining legislation is inadequate and there is a lack of mining administration that defends local rights and interests. The Mining Code, despite its updates, does not represent the kind of judicial tool that the country needs today regarding this topic. It protects and benefits mining companies more than land owners and the Argentinian State, who give up their goods and run the long-term risks.

There is an absence of complete information, without editing and from a holistic perspective, which can provide the population with an objective view of this kind of activity, what its actual benefits may be, and its risks and consequences.

We are also worried by the lack of public debate, to make bureaucrats and legislators responsible for the decisions they make: a situation that makes the system of popular representation fragile and unreliable.

We are uncomfortable that anyone can think, or believe, that this kind of business will be the salvation of the people of rural Argentina.

We do not know if mining activity has created good living conditions or sustainable achievements in other parts of the country. The known testimonials cause us to think the opposite.

We propose:

More information and public debate. We need profound education on the subject, by the authorities and legislators, valuing the contributions that forums and environmental groups provide in different parts of the province.

A total revision and reformulation of mining legislation, of environmental impact assessment procedures, and of the mechanisms for public hearings for debate. It is current lax legislation, and not just the potential of existing metals, which favors mining investment in this country.

Formalizing the principle of water as right of all citizens and, as such, regulating its use and defending underground and surface water reserves, impeding the use and waste of fresh water in mining and associated businesses.

Promoting productive activities that benefit the region and that can be maintained in the long term without preying on nature. We think that mining is not the only economic option for the Patagonian Mesa, more so because it is not a sustainable solution in the long term. We need to promote genuine, legal activities, compatible with each location, respectful of the environment, and with a long future.

Reaffirming Provincial Law 5001 regarding the suspension in Chubut of mining activities with the [negative] characteristics [already] mentioned.

We think it is necessary to install an ethical-spiritual vision, with deep historical, cultural, and ancestral roots,  so that shared decisions can be made in a responsible and communitarian manner: a different model that questions and opposes the model provided by a system in which the greed of profit and exploitation permanently damage our planet’s resources.



Pan American to buy Aquiline Resources

Associated Press

16 October 2009

Pan American Silver Corporation has agreed to acquire rival Aquiline Resources Inc in a deal valued at USD 608 million.

Aquiline's board said that it supports the deal which would give its shareholders about 19% of the enlarged Pan American which is based in Vancouver.

Mr Geoffrey Burns, president and CEO of Pan American, said that Toronto based Aquiline provides a perfect match with Pan American's core strength as a developer and operator of primary silver mines.

Pan American aims to become the world's largest and lowest cost primary silver mining company. It already has 8 operating mines in Mexico, Peru, Argentina and Bolivia. With the deal, Pan American will gain Aquiline's Argentinian Navidad project which is thought to be one of the world's largest underdeveloped silver deposits, as well as its Calcatreu gold and silver deposit in Argentina and a gold deposit in Peru. Under the deal, Pan American would offer 0.2495 of a Pan American common share plus 0.1 of warrant to buy Pan American common shares for each Aquiline share.

Pan American estimated that the implied value of the offer at Tuesday's closing Pan American Price is CAD$ 7.47 per Aquiline share. It said that would be a 36.6% premium over Aquiline's closing price.

Aquiline's executive team said that it was impressed with Pan American's track record of bringing projects to production and welcomed the deal.

Mr Marc Henderson CEO of Aquiline said that he and the board feel accepting the offer is in the best interests of our shareholders, through both the attractive up front premium and the opportunity to participate in the tremendous upside we see as the development of Navidad unfolds in an enlarged Pan American.



A Long battle for silver

Barry Critchley, Financial Post (Canada)

16 October 2009

The planned takeover of Aquiline Resources Inc. by Pan American Silver Corp., a $636-million deal announced this week, is straightforward. One of the world's largest silver producers has agreed to buy an exploration and development company that owns Navidad, one of the world's largest undeveloped silver deposits. And to get ownership of that Argentinian deposit, Pan American Silver has offered a healthy premium and has the support of Aquiline's directors and senior officers.

What's less straightforward is the non-headline story, the almost five-year battle Aquiline fought to finally own Navidad, home to an estimated 450 million ounces of silver, but which has not been developed thanks to a government decision in the province of Chubut. Indeed, had a Newmont Mining geologist not given data about Navidad to a staffer from IMA Exploration, a Canadian company that was also interested, the chances are that the story could have ended a few years back.

At the time, IMA (now called Kobex Minerals) and Aquiline were both interested in the Calcatreu gold and silver deposit about 160 kilometres from Navidad. (Calcatreu was originally owned by Australia's Normandy Mining, but ownership was transferred to Newmont following its 2002 acquisition of Normandy. Newmont then made the decision to exit Argentina.)

After its first visit to Calcatreu, Vancouver-based IMA went to Newmont's regional office, 80 km away. In that office was a map showing Bulk Leach Extractable Gold (BLEG) data that identified a very large anomaly.

Flora Wood, Aquiline's vice-president of investor relations, said the IMA geologist asked about the map and was told that it it encompassed regional data pertaining to a larger area than Calcatreu. But IMA's geologists wanted it anyway. So after some deliberation, "the Newmont geologist agreed to provide this second piece of data, even though that data had not been requested or shared with any of the other potential bidders who had signed confidentiality agreements and received data pertaining to the Calcatreu sale," she said.

After receiving the BLEG data in late 2002, IMA declined to bid on Calcatreu. Instead, it started staking Navidad claims. In January 2003 Aquiline signed a letter of intent to acquire Calcatreu, by agreeing to pay US$2.05-million over the next 36 months. The next month IMA announced its discovery at Navidad and reported "two distinct styles of mineralization."

Ten months later, Aquiline asked IMA for information on its methods of discovery at Navidad. In March 2004, Aquiline filed a statement of claim against IMA in the Supreme Court of British Columbia. The statement "asserts that IMA unlawfully used confidential information owned by Aquiline's subsidiary to identify and acquire the Navidad project where IMA has recently announced a significant silver and base metals drill discovery."

One year later the trial started, 32 days of evidence were heard and in July 2006, Aquiline was awarded ownership. "The court found that IMA had received certain bulk leach extractable data (BLEG A) in connection with its review of Calcatreu, that the BLEG data was confidential in nature, and that the use by IMA of the BLEG A data to locate and stake the Navidad Property was in breach of the confidentiality agreement signed by IMA," Aquiline said at the time.

Five months later, Aquiline assumed operations. In June 2007, IMA launched an appeal, but it was dismissed. IMA sought leave to appeal to the Supreme Court of Canada, but that was denied at the end of 2007.

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