28 September 2007, 1:01am EDT

Ecuador: Government Shuts Down Ascendant Copper’s Junín Project

Ecuador Copper Mesa/Ascendant Copper Rio Tinto

(Ottawa/Intag) Canadian junior mining company Ascendant Copper Corporation’s ambitions to develop a major copper mine in the Intag region of northwestern Ecuador were dealt a serious blow on September 25, 2007, when restrictions on the company’s activities in the area turned into a total prohibition.

Ecuador’s Minister of Mines and Petroleum Galo Chiriboga held a news conference on Tuesday, September 25th where he announced that, based on a legally-binding 2005 resolution by the nation’s Attorney General, the Ministry of Mines and Petroleum was prohibiting Ascendant from carrying out any and all mining and community relations activities within the company’s Junín mining concession, in northwest Ecuador. The prohibition by the Ministry also affects all work carried out by contractors hired by Ascendant. The decision also will also affect the company’s ability to undertake its environmental impact study for exploration, which it has not resubmitted after the Ministry rejected its study in December of 2006.

Ascendant’s presence and activities were deemed illegal in Cotacachi County, where the company’s Junín mining concessions are located, because it failed to get authorization from the Municipality of Cotacachi before starting operations in the area, as required by article 11 of the nation’s mining law. The decision could affect dozens of other mining projects in Ecuador that also bypassed this essential authorization.

The Minister also made clear that any mining concessions that that are in violation of the law or Ecuador’s Constitution could be annulled, and announced that all of the country’s concessions are under a judicial review. It is widely held that most of Ecuador’s mining concessions are in violation of article 88 of the nation’s Constitution, which protects the affected communities’ right to be consulted prior to development activities being undertaken. 

At the news conference, the violence affecting the Intag area in past months was also brought up. Beyond the actual and potential illegalities cited by the Minister, the Subsecretary of Environmental Protection of the Ministry, Lucia Ruiz, highlighted the Ministry’s concern with the violence linked to the presence of “parallel armies” in Intag, referring to the paramilitary presence that has led to repeated violent confrontations between irregular armed groups and unarmed community members opposed to the mining project. The prohibition affects 9,504 hectares in Junín, comprised of the Golden 1, Golden 2 and Magdalena concessions, which had been Ascendant’s flagship properties in Ecuador.

Even before this latest blow, the pullout of Chilean mining company Antofagasta last month from Ascendant’s Chaucha project help to put the price of the company’s shares in a free-fall, reaching a new low of $ 0.15 per share — 9% of its $1.70 initial public offering price in November of 2004. At the same time, and possibly related to the company’s difficulties in Intag, Ascendant has also been unable to make any new plays based on its “strategic alliance” with global mining giant Rio Tinto, which gave it access to Rio Tinto’s historical exploration data in western Ecuador.

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For background see the Ministry announcement (in Spanish): Minas y Petróleos declara suspensión de actividades mineras en Intag.

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