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Win us with honest trifles

Did you think Ecuador political risk for mining was bad before this week?

You ain’t seen nothing yet!

The judgment passed down yesterday by Ecuador’s Constitutional Court on Cornerstone Capital (CGP.v) and the State mining entity Enami sets a legal precedent that will stop a whole range of junior mining projects from happening, up and down the country. So bookmark this short post and, at your own leisure a few months down the line, remember how you ignored its effects on your junior mining portfolio.

You have been warned.

7 Comments

    Would you think this will affect the copper producers and others who are have projects online (I’m thinking of not just Cornerstone but their partner, SolGold).

    Specifically wondering how a company with more clout like Equinox might do (I have positions in neither of these, but am unaware of the specifics of the ruling you reference).

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    Or a family with connections like Lundin Gold who already negotiated a project such as Fruta Del Norte.

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      Fair question. IMO LUG at FDN will carry on regardless and if you’re long there don’t sweat the ruling. This is a project-level issue that first and foremost affects explorecos in sensitive biological/environmental regions and Ecuador has a lot of those (for more details, see maps). But even those companies in less sensitive locations will feel the chilling effect. One thing FDI always wants is to feel welcome, governments and Presidents come and go, CC decisions stick around.

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    Also, the ruling, according to the CGP’s NR doesn’t affect the Cascabel project (which is huge). Do you have a different understanding when delving deeper into this?

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    Thanks. I have very little exposure to the country, but have been interested in the Cu/Au explorers there and a few are on my watchlist (like Adventus).

    I’m hearing you to pay attention to precedent and watch how a potential future legal mouse hole can become an elephant hole depending on how it’s interpreted, used, or exploited.

    Reply

    […] reverted, as someone said in the comments section of the post added to the open blog last week (12), “…a potential future legal mouse hole can become an elephant hole…”. Your author strongly […]

    Reply

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