Eco Oro Minerals (EOM-T) has moved one step closer in advancing the Angostura gold-silver project in northeastern Colombia, as it has noted the deposit sits largely outside of recently approved regional park boundaries. The news caused its shares to skyrocket 122%, or 77¢, to close Jan. 18 at $1.40 on heavy volume.
Based on its initial review, Eco Oro estimates that 90% — or 1.9 sq. km of the 2.2 sq. km deposit — lies outside of the proposed Santurban regional park boundaries that Colombian authorities declared earlier in January, adding that the limits don’t impede development of its core asset.
The unaffected resource includes about 3 million equivalent oz. gold, or 89% of the deposit’s indicated category and 2.3 million equivalent oz. gold, or 96% of its inferred resource.
“We are happy to see that the Colombian authorities have clearly recognized the importance of finding the balance between mining and the environment. We’re hopeful that we are going to be able move the project forward from here and out,” Fiona Grant Leydier, the company’s director of investor relations, says.
While this is one item that the company can cross off its checklist, it still has a few more that need to be taken care of before it can push the project to feasibility stage. Of note, it is still waiting the definition of the Santurban paramo boundaries.
“The paramo is still one outstanding matter that has yet to be resolved by the Colombian authorities,” Leydier says, adding that she’s unsure when the new definition will be made public.
There is a disagreement about what comprises a paramo ecosystem, which is protected from mining and other industrial activities. According to the Atlas of Paramos, a document prepared by the government’s independent research firm in 2007, the jurisdiction that hosts the Angostura project constitutes five paramo ecosystems: super paramo, paramo, sub paramo, high Andean forest and Andean forest. Based on this, Eco Oro’s project sits in the high Andean forest and Andean forest.
However, a 2002 resolution from the Ministry of Environment and Sustainable Development removed the high Andean forest and Andean forest from the definition of a paramo.
BMO Nesbitt Burns analyst John Hayes comments that it “remains uncertain as to the degree to which the park boundaries match the ultimate determination of the paramo in the area on the park.”
Leydier says the government is conducting a “more robust and specified analysis” of where the paramo lies. Once that is resolved, the Vancouver-based developer will move closer to initiating a feasibility study on the project.
Eco Oro is working on completing a prefeasibility study (PFS) on the proposed underground operation. The study was previously slated for late 2012, but the timeline was extended so the junior could further test metallurgical processes to determine the best one for the proposed mine, Leydier says. The PFS study is now expected by the third quarter of 2013.
While the development of the Angostura project may only be marginally affected by the park boundaries, Eco Oro says a decent portion of its non-core mineral and surface rights are within the park area.
In total, 63.9 sq. km — or 21% of its 301.3 sq. km of mineral rights — exist within in the park. It plans to seek compensation for the assets it won’t be able to use.
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