Cornerstone Capital Resources Inc V.CGP

RE: 70% windfall tax proposed in Ecuador

[nijinsky70]

I guess most of the investors only see the sensationalized headlines and no one reads the fine prints. Especially when there were no fine prints available on how this tax is to be applied. As a result panic sets in and the sell-off ensued. If the tax is applied under your illustration it is at least somewhat acceptable. However, with most gold producers barely making sufficient profits at the current gold price level, a tax that takes away most of your upside (via future higher gold prices) is not the way to encourage investments in your country. I think companies would rather endure a hefty royalties (at least such costs are firm) than a windfall tax (that is variable and totally limits your up side gains).