RE: Smart enough?https://www.stockhouse.com/Community-News/2012/June/26/Canadian-companies-in-Bolivia-wary-after-Glencore-
Operating in Bolivia has been very difficult for foreign companies because President Evo Morales has been implementing leftist policies in Bolivia during his reign since 2006.
Bolivia’s decision to nationalize Glencore International PLCs’s Colquiri zinc and tin mine has raised concerns in the mining sector that more operations will face similar actions.
Orvana Minerals Corp. (TSX:T.ORV, Stock Forum) is among the roughly 20 Canadian mining companies which are currently active in Bolivia, according to the Prospectors and Developers Association of Canada.
Orvana believes that it will be required to re-negotiate the terms of the existing contract for its Don Mario mine in eastern Bolivia because of a change to the constitution that requires mining companies to form joint ventures with the government.
The so-called co-operatives, a term that refers to independent Bolivian miners, currently have no stake in the Don Mario copper-gold-silver mine, which reached the commercial production stage in January 2012, producing 1,800 tonnes per day.
“Part of the Bolivian system is that certain groups of miners have certain rights to orebodies that were given to them in the past by the state mining company,” said Bill Williams, CEO and President of Orvana.
Glencore's Colquiri mine was recently nationalized in the wake of hostilities between independent mining co-operatives and the Swiss commodities giant.
“When anything like this happens it’s a cause for alarm, but we operate as if we’re going forward right now,” Williams said.
Meanwhile, another Canadian firm has decided not to wait around to see what action the Bolivian government would take.
Colombia Crest Gold Corp. (TSX:V.CLB, Stock Forum) said it is planning to put its San Simon project in Bolivia up for sale and move to more “mining friendly” countries.
“We are now selling that asset, so we’ve known that this type of stuff is going on and it has been a nightmare with Morales,” said Dan Fish, manager, corporate communications with Colombia Crest Gold, which has been active in Bolivia for 16 years.
He expects that the eventual buyer will be a Bolivian company.
In recent years, Morales has nationalized foreign owned oil, natural gas and communications companies in Bolivia.
“So it’s all hands off,” Fish said. “It’s just extremely difficult to raise money or run a company if it is Bolivia based. That’s why we have diversified and gone to a much more mining friendly country, in Columbia.”
On Tuesday, Colombia Crest was trading for
.22 a share. The company has a market cap of $18.8 million, based on $84.6 million shares outstanding. The 52-week high and low was
.395 and
.15 respectively.
For its part, Orvana is unable to say when its mining contract might be negotiated. Williams said the company is waiting for the government to contact them.
On Tuesday, Orvana was trading at
.95 a share. The company has a market cap of $129.7 million, based on $136.6 million shares outstanding. The 52-week high and low was $2.76 and
.79 respectively.