RE: Flash Alert Also posted the same day on Pinnacle Digest by tonyhawk12.
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Golden Reign Resources - in Nicaragua like B2 Mining.
tonyhawk12
Nicaragua holds new promise for foreign investors
The Globe and Mail
Complications remain but there is also tremendous opportunity. And Canada leads the pack
By: Nicolas Johnson, Thursday April 5th, 2012
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The business world has never been so optimistic about Nicaragua. Foreign investment jumped to a record last year, and the surge over the past five years far exceeds the gains in other countries of Central America.
B2Gold’s Limon mine apparatus in Nicaragua
Such measures, along with recent studies showing Nicaragua has the region’s lowest rates of robbery and assault, indicate how much the country has changed since its violent upheaval in the 1980s, and even since elections in 2006. Before then, the government and its heavy bureaucracy made business difficult, according to executives who have worked in the country.
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Yet Nicaragua’s six million people face challenges that weigh on daily life and investment. Poverty is widespread, and the lack of a valid system to register property has led to confusion, court battles and confiscations of land and property. While that’s keeping some businesses away, others are going in and finding ways to succeed.
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Canadian companies were the biggest foreign investors in Nicaragua last year, and B2Gold Corp. is their poster child. The Vancouver-based gold miner is among the biggest single overseas investors and taxpayers in the country, the largest exporter and, with more than 2,000 local workers, the third-biggest private employer.
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“We’ve just had a very positive experience in Nicaragua,” Clive Johnson, the company’s president and chief executive officer, said in an interview. Johnson spoke on a panel with the Nicaraguan mining minister and ambassador to promote the country at a mining conference in Toronto last month.
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It is trying to change perceptions of a nation ravaged by poverty and violence. Nicaragua last dominated headlines in the 1980s during the Iran-Contra scandal over the United States using profits from secret arms sales to Iran to fund guerrillas opposed to Nicaragua’s Marxist government, the Sandinistas.
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Today’s Sandinista government under President Daniel Ortega took office in January 2007, and was re-elected last November. Its efforts to improve business conditions helped foreign investment more than triple over the past five years to a record $968 million (U.S.).
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“There’s tremendous opportunity here,” said Claudio Marcel, the Nicaragua manager for Bank of Nova Scotia, which operates a leasing business in the country. But “you have to make sure you do your homework,” he cautioned. “The country is in the early stages of development.”
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Nicaragua’s greatest business risk is the lack of a reliable land registry, leading to disputes over who owns potentially lucrative oil and mineral deposits and beachfront properties. B2Gold employs six lawyers who keep track of litigation as well as properties and registrations.
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In February, the government sent in police to confiscate the $2 million Hotel Punta Teonoste resort from a Swiss man who said he had bought the property 13 years ago, according to news reports.
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“I’ve seen a lot of people in real estate get into difficulties,” said Tom Ogryzlo, who was president and chief executive officer of Toronto-based Polaris Geothermal Inc. before the energy producer was acquired by a U.S. company in 2009.
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The challenges aren’t stopping Polaris and B2Gold from pushing ahead with investments that exceed $400 million and $200 million, respectively. Those are significant sums in a country whose economic activity totalled $6.9 billion last year, less than 1/20th that of Toronto’s. Total Canadian investment in Nicaragua surged more than fivefold last year from 2010, to $255.5 million.
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Ogryzlo, who began doing projects in the country 15 years ago, and B2Gold’s Johnson both cite their relations with President Ortega as key to their success in business. Ogryzlo said he used to meet with the President’s close staff every two weeks or so, and Johnson fondly told of his first meeting with the politician a few years ago to discuss B2Gold’s mine at La Libertad, Ortega’s home town.
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“Our 20-minute meeting turned into 2½ hours because he wanted to know what we were going to build and how it would be different,” Johnson said. “We’ve been able to sit down rationally with government officials at very many levels,” he added. “We’ve been able to have meetings and solve problems. It’s a stable democracy. They want foreign investment.”
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Although official numbers aren’t available, estimates put the number of Canadian companies in Nicaragua at a couple of dozen. Export Development Canada says it gets more requests from companies operating in Costa Rica and Panama than Nicaragua. And while neither Canada nor Nicaragua has a full embassy in the other’s country, they have been discussing a free-trade agreement for years.
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Canadian exports to Nicaragua fell 7% last year from 2010 to $37.3 million (Canadian), while imports surged by more than 55% to $333.7-million.
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“We feel that with a free-trade agreement, we could increase exports to Canada and increase exports from Canada to Nicaragua,” Francisco Campbell, Nicaragua’s ambassador to both the U.S. and Canada, said in an interview in Toronto last month. He was accompanying Minister of Energy and Mines Emilio Rappaccioli on meetings with investors.
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“I think the government needs to show to other potential investors that people can invest down here and succeed,” Dale Craig, B2Gold’s Nicaragua manager, said in an interview from the capital of Managua. “And we’re a good example of that.”
tonyhawk12 then replies with the same flash alert previously posted.