Aurelian suspends work in Ecuador
Aurelian suspends work in Ecuador
2008-04-29 09:17 ET - News Release
Shares issued 135,449,160
ARU Close 2008-04-28 C$ 4.56
Mr. Patrick Anderson reports
AURELIAN SUSPENDS DRILLING AS REQUIRED BY THE ECUADOR MINING MANDATE
Aurelian Resources Inc. is obliged by order of the mining mandate to reduce its operations and work force. The previously announced mining mandate, effective April 18, 2008, ordered a halt to mining activities on concessions, including drilling, exploration and development.
"We profoundly regret the impact the mining mandate will have on our employees, both in Ecuador and in Canada. However, the mining mandate requires a complete suspension of activities on our concessions while a new mining law is drafted and implemented," said Patrick Anderson, president and chief executive officer. "During this mandated standby we will continue to comply with obligations to the government and other stakeholders and to maintain our surface and mineral rights, facilities and assets in good standing to the extent permitted by the law with a reduced group of employees."
The following adjustments are being made to Aurelian's operations in response to the mining mandate:
- Suspension of drilling operations -- The company's drilling contractors in Ecuador have been notified to demobilize in an orderly manner.
- Work force reductions -- Aurelian's work force of approximately 450 employees has been reduced by 80 per cent, with reductions at the Condor project camp, Quito and Toronto locations. The company assisted Ecuadorian employees by properly terminating their employment under Ecuadorian law and providing for a voluntary support payment. In addition, Aurelian will work with local authorities to continue to provide some basic health services and maintain several community development projects.
- Deferral of FDN scoping study and updated resource -- Limited work will continue on Aurelian's scoping study and updated resource for the Fruta del Norte gold-silver deposit. However, it is anticipated that the final reports will not be released until after the mining law is in place thus defining the fiscal regime and therefore the costs of development and production.
Mr. Anderson concluded: "Our project has received strong support from local communities in Ecuador. We regret the effect the mining mandate will have on our employees and their families as well as suppliers and the larger community. We remain committed to Ecuador, our local communities and our employees, and look forward to the day when the law will permit us to work together to build a world-class mine of which we can all be proud."
About the mining mandate
The mining mandate was adopted by Ecuador's Constituent Assembly on April 18, 2008. An unofficial English translation of the new mining mandate prepared internally by the company is available on Aurelian's website.
Some of the major features of the mining mandate that may have an impact on the company are as follows:
The mining mandate limits mining companies to holding a maximum of three concessions. Should this apply to Aurelian, the company will retain title to the single concession containing the Fruta del Norte (FDN) epithermal gold-silver deposit, as well as two others that Aurelian believes contain the most prospective geology for additional epithermal discoveries. Aurelian will seek to protect all investments made to date at its other concessions that it has been actively exploring since 2003.
The mining mandate invokes an immediate 180-day suspension of activities on virtually all mining concessions in Ecuador while a new mining law is drafted and adopted. Aurelian is awaiting formal notification from the Ministry of Mines and Petroleum of the effects of the mining mandate on the company's operations, as defined in the final provisions of the mandate.
The company is engaged in continuing consultations with its legal counsel and officials in Ecuador to determine the scope and impact of the mining mandate on the company's exploration and mining activities in Ecuador. While the company has made efforts to ensure that the information contained herein is accurate and correct, the information provided by the company is subject to uncertainty as well as continuing developments and changes, and may not reflect future mining laws enacted in Ecuador or the manner in which the mining mandate is interpreted or implemented. The interpretation and implementation of the mining mandate may give rise to additional unforeseen adverse consequences to the company and future laws may be adopted in Ecuador that may impact further adversely the company's future exploration and mining activities in Ecuador.
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