The best success story in the gold exploration sector has been dealt a tough blow as the Ecuadorian government suspends mining.
According to an article carried by Bloomberg, Ecuador's Constitutional Assembly, elected to rewrite the constitution, voted 95-to-1 in favour of the moratorium, causing Aurelian’s stock price to drop 45% in two days.
The moratorium covers mid- and large-scale mining projects and cancels up to 5,000 concessions in Ecuador, including ones in protected areas or where water sources are under threat. This move by the government puts on hold a deposit with an estimated 13.7 million ounces of gold and 22.4 million ounces of silver. Issues concerning the environment and no doubt money will need to be overcome quickly in order to get this project back on track.
The geo-political situation of any investment needs to be considered as we can see there are other cases of this sort of problem arising, for instance; Khan Resources with the Mongolians, Uranium Resources with the Navajo, Aurora Resources with the Inuit, plus Argentina, Zambia and the Congo, where the mining criteria is not clearly defined. Although we do not own any of this stock we do hold Khan and Aurora so we understand what a gut wrenching feeling this action will have caused those who have put their hard earned cash into Aurelian Resources and we sincerely hope that the situation is resolved soon.
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