Friday in Ecuador.....

...will be an interesting day for mining there, because according to today's reports that's the limit date for Ecuador's government to release details of its new mining contract with producers (the whole shebang we told subscribers about last Sunday and noted on the blog Monday evening). In other words, Ecuador's suited people have until Friday latest to tell us what kind of royalty, windfall tax and etc type things they propose for the sector.

The same report has the President of Ecuador's Chmber of Mining Commerce very happy about recent developments.

It's Dynasty time. At last.

Dynasty (DMM.to): What subscribers read about Ecuador yesterday

If you were a subscriber you would have known yesterday (Sunday 7th) why DMM made a decent move today (Monday 8th). First they read this:

Dynasty Metals & Mining (DMM.to): Is the long wait nearly over? Modestly optimistic news came out of Ecuador Friday evening, which we examine in detail in ‘Regional Politics’ below.

And then in the 'Regional Politics' section of the weekly, 1,018 of the 14,000 words contained in IKN79 were devoted to the subject. The only thing missing is the small chart that's also available on link 15.

Ecuador: The government set to sign its deals with miners

News out of Ecuador on Friday was positive. Early Friday the Ministry of Non-Renewable Natural Resources (MRNNR) (15) published the following (translated):

The Ministry of Non-Renewable Natural Resources (MRNNR), via the Vice-Minister of Mines, has made ready the “Contract for Mining Exploitation” that will be negotiated with those mining companies that are found in the the exploitation/production phase.

The Vice-Minister of Mines, Luis Bustamente Monteros, said that the contract has been elaborated together with the Tax Office (Servicio de Rentas Internas (SRI)), the Ministry of the Environment, the Secretary of the People, the Ministry of Finances and the National Secretary of Water (Senagua) due to their direct areas of competency in mining activities.

The terms of the contract document will be disclosed once the Minister of Non-Renewable Natural Resources, Wilson Pástor Morris, signs the respective ministerial agreement as established by Article 41 of the Mining Law.

Bustamente said that the contract model is directly related to terms established by the Mining Law and the Law of Fiscal Equity. This means that the document will include terms on royalty payments as well as windfall taxation.

He confirmed that the “Contract for Mining Exploitation” must be signed by mining companies that have large scale and industrial projects, that are in production phases and whose concessions were acquired before the implementation of the current Mining Law (January 2009).

Included in the list are the five projects considered as the “Strategic Mining Projects”: Fruta del Norte (Kinross Aurelian), Quimsacocha (Iamgold S.A.), Río Blanco (San Luis Minerales S.A.), Mirador (Ecuacorriente) and Panantza San Carlos (Explorcobres S.A.). The Fruta del Norte, Quimsacocha and Río Blanco projects have gold and silver resources, while the Mirador and Panantza San Carlos projects have copper resources.

For the negotiations, programmed to begin around the middle of December 2010, the MRNNR and Vice-Ministry of Mines will be represented by teams made up of national and foreign experts.

Vice-Minister of Mines Luis Bustamente said that once the contract model is officialized it will be shared with representatives of mining companies that operate in the country.

The MRNNR also included this map with its release showing the location of the five large projects deemed “strategic” by the government of Ecuador.

Dynasty (DMM.to), along with other mining companies outside the five “strategics”, was not named in the release, but this new contract is clearly the one DMM signs with the government as well. As the Zaruma project is already up and running (though on tick-over until the deal is done and dusted) DMM will be there at the front of the queue to sign and be done on this issue.

Now for a bit of Friday timing. Interestingly, the MRNNR release (16) came early Friday morning, but seemed to pass largely un-noticed by the wider world. Around midday Friday, while the markets were still open, there was an oblique mention of the NR in another Ecuador government website (17) but it wasn’t until the story was picked up by State newswire ‘El Ciudadano’ (The Citizen) and published after the Friday bell (5:15pm local time) (18) that other newswire services noted the event and ran their own copy (19) (20) etc. This may explain the lack of movement seen in DMM.to on Friday, because the contents of this release are a solid step forward for mining companies in Ecuador. There are still unknowns here, as we’ll be particularly interested in seeing the precise terms of state burdens proposed by the Ecuadorian government (royalty percentages, WFT details etc) and we’re still going to have to wait until mid-December to get to negotiations between government and mining companies underway, but we now have a document that’s ready to be presented and we have a fairly solid timeline (though the usual LatAm caveat applies at this point; when it comes to timescales, anything can happen and often does).

As for the terms that may be included, we recall that according to the letter of Ecuador’s revised mining law each mining company must negotiate its terms with the government. However, by the sounds of things it looks like there will be some sort of group negotiation, if only on the main terms that are most likely to include its royalty and windfall tax (WFT) agreements. We also recall that according to the terms of the mining and state fiscal laws, the WFT cannot be set under the spot price for the metal on the day of the agreement, which means that, for example, if DMM signed this very evening the WFT base level could not be set under Friday’s London PM fix of U$1,395/oz

Be clear: I fully expect Dynasty (DMM.to) to rally on this news Monday morning. I’m also reasonably confident that once details are revealed we’re not going to see any nasty surprises for mining companies and the terms that Ecuador wants to apply will allow mining companies to go ahead, do their stuff, mine for metals and make a decent profit. Yes, the burdens are likely heavier than other regional countries, but when it comes to DMM we’ve already accounted for a 51% total burden on revenues and come out with a stock that is a virtual double, so there’s plenty of room for the very robust economics displayed by DMM at Zaruma to accomodate extra state payments (according to this analyst’s Casio at least). So once the contract terms are known to the outside world, there’s every reason to see a second rally in DMM. In my mind’s eye (Ecuador and mining: WHAT COULD POSSIBLY GO WRONG?) we’d then get a quiet period until the negotiation gets going mid-December and if all goes well between miners and government suits, shareholders in DMM will be set for a year to remember in 2011, a year to wipe away three years of suffering.

Yes, I’m bullish DMM.to. Always have been in fact, because there’s no getting away from the fundamentals on this one. All we want is a final piece in position, a country that finally gives DMM a chance to do some serious mining.

DYODD, dude. I'm also happy to report that at least two subscribers (maybe more, I only have evidence from two people mailing in) took advantage of those $4.00 prices at the opening bell.

Why is South American Silver (SAC.to) so keen on running a bought deal financing this month?

On June 18th South American Silver (SAC.to) announced a $4m bought deal financing with Canadian house Wellington West as lead underwriter. This is probably a smart move, as even though SAC had working capital of over $5.3m as per its last report (March 31st) and was burning it at a modest rate of $400k per month, taking advantage of the recent price hike isn't such a bad tactic.

It's also smart when you consider the bad news about concessions in Bolivia that's bound to affect its flagship Mallku Khota project that has kinda been non-reported in the English language media up to now. Yet another reason to subscribe to The IKN Weekly, as subscribers knew all about the upcoming crapstorm that's going to hit Bolivian-based juniors two issues ago on June 20th. It's not too late to cancel your participation in the bot deal and leave Wellington holding the bag, folks....it's not due closed until July 12th :-) Here's the excerpt from IKN59.

Bolivia’s mining law

Last week, the Bolivian government ran a “New Mining Law” seminar to discuss the structure of the reforms to come with the industry. Here are some of the main points to consider about the upcoming changes to the law (14):

1) All mining operations will be run as 50/50 joint ventures with the State, via its Comibol state mining company (15).

2) No new concessions and many current concessions revoked. Concessions that have already been granted to co-operative groups inside Bolivia will be honoured, but the new law envisages that current non-cooperative concession holders will have to move to a operators contract within one or two years and that in the future only contracts to mine to companies and individuals will be granted. To quote the Vice-Minister for the Productive Development of Mining and Metallurgy Héctor Córdova (16), “Before the granting of a concession brought certain privileges to its owner, such as the possibility of using the concession as loan collateral or even as a family heirloom, but now the contracts will state that the mineral resources are owned by the State of Bolivia and will authorize mining rights to the operator for their exploitation and the contract holders will no longer be owners of the resources.”

3) An as yet undefined proportion of profits made by mining companies will have to be reinvested inside Bolivia and will not be remittable. This rule is envisaged as an alternative to raising further current mining royalty rates, or in other words it’s a new stealth tax on mining.

4) Once the new big smelting plant, currently under construction at Karachipampa Bolivia, is opened, all lead, zinc and silver production in national territory will be required by law to be sent to this plant for processing. As any mining executive will immediately recognize, this is a serious crimp on potential profits for privately owned mining operations in Bolivia, as smelting charges can be raised (or lowered) at a moment’s notice and the mining company is forced to pay the price charged. When the smelting operations are held in the hands of the State (and an openly Socialist one at that), the shivers that run down capitalist spines are even stronger.

5) Indigenous consultancy on projects will be an integral part of the permitting process, much like the current situation in Ecuador where not only does the law exist but it applied to the letter.

At the conference, Mining Minister José Pimentel said that the aim was to have a “clear concept” of what mining in Bolivia would be like in the future and that mining in the country should be “efficient, profitable and responsible”. That may be his wish, but your author wonders “profitable for whom?” and once again states clearly that junior mining companies operating or wanting to operate in Bolivia should be avoided like the veritable plague by sector investors. When the field of play is tipped so heavily in favour of the State there threatens to be mere crumbs left for the retail player compared to peers operating in different, more ‘investor-friendly’ countries. Or put another way, it didn’t surprise this author in the least to hear that South American Silver (SAC.to), the junior silver exploration company currently developing its Mallku Khota project in Bolivia, chose this week to announce its $4m bought deal financing (17) to be run by Wellington West. It’s not going to have much chance of raising at current levels once news of changes in the mining laws in Bolivia becomes more common knowledge. A company headed up by ex-Novagold Greg Johnson, too....hoodathunkit?

Ecuador's mining law signed and in effect

It's a done deal. In front of thousands of miners and gov't bigwigs, Correa has put his signature on the bit of paper and done the speechy thing about mining and the future of Ecuador.

He arrived half an hour late...kind of fitting under the circumstances, no?

UPDATE: IMAGES!!!!!

Ecuador: Today's signing of the new mining law

Inquiring minds have been asking me about the signing of the new mining law in Ecuador that is supposed to happen today. Allow me to explain.

• It's confirmed that President Studmuffin will sign the law into effect today.

• It is happening at 3pm Ecuador time today.

• Not only that, Correa has chosen to do the signing ceremony in the town of Zaruma, Portovelo. This happens to be the exact same place that Dynasty Metals (DMM.to) operates.

So if you think that the 10% move in DMM these last two days has been kinda neat.....

.... just wait for the upside when the can of corn and cormark get their hype machines into action as from mañana. Above info taken from decent sources.

mojitos served. the end

PS: Dear agoracom EC.v dumbasses, please feel free to do what you always do and steal the post or the info and pretend you're the source of all wisdom on Ecuador without providing a link to source. And oh look! DMM is up 23c since this got posted...there's a thing. Ever thought about offering Spanish lessons to analysts at RBC, boys?

A sad day for the Ecuador knownothings

The mining jungledrums are abuzz with the news that Ecuador will ratify, confirm, sign, put into action or whatever you want to call it the new mining law on November 4th (and yeah, nov 4th 2009 before you ask). Here as an example is Cornerstone Capital (CGP.v) and its news release, but you're going to see plenty of variations on this theme today if you get autofeed PRs from miners.

MOUNT PEARL, NEWFOUNDLAND AND LABRADOR--(Marketwire - Oct. 16, 2009) - Cornerstone Capital Resources Inc. (TSX VENTURE:CGP - News; FRANKFURT:GWN - News; BERLIN:GWN - News; PINK SHEETS:CTNXF - News) is pleased to announce that at a meeting held yesterday in Toronto, the Government of Ecuador confirmed that the Regulations to the Mining Law will be approved by November 4, 2009 and exploration work will then be allowed to resume.

This announcement was made by the Ecuadorian Vice-Minister of Strategic Sectors, Mr. Luis Roman and the Vice Minister of Non-Renewable Natural Resources (ex Ministry of Mines and Petroleum), Mrs. Carolina Bernal. Both Government representatives are part of an Ecuadorian delegation that met with their Canadian peers in Ottawa the previous day. CONTINUES HERE

Ecuador and Mining: The mining minister speaks (and says very nice things)

Pinto (for it is he)

A significant interview with Germánico Pinto, Ecuador's Mining Minister, was published today by ALBA press. You still think Ecuador is against mining? You think foreign companies are not welcome? You think mining isn't going to happen in Ecuador? If so, you live in World Of EpicFail. What you're about to read is a man who's clearly gearing up the country for the imminent arrival of modern mining to Ecuador. And Canadian mining companies are fully welcome. Don't say I didn't tell yaz, dudes.

The IKN Weekly Subscribers got the following full translation of interview (done by yours truly) sent to them just after 1pm EST. They had three hours of open market to act on this. Now the market is closed it's your turn to copypaste, stick it on a bullboard without a link (as per usual) and claim kudos for yourself. Enjoy.

The New Mining Law Allows the State to Control Non-Renewable Natural Resources

The Minister of Mines and Petroleum, Germánico Pinto, in an interview given to ALBA, stated that the with new mining law the State gains the capacity of control, regulation and management of non-renewable natural resources.

The minister also explained that an effective system of royalty collection has been established for the exploration and exploitation of concessions so that they can be redistributed to the communities that may be affected by mining projects.

Among other things, Pinto emphasized the need the socialize the sector, to have integral and effective plans and to have all sectors involved in the decision-making process to avoid affecting the environment, to push forward with the creation of he new State Mining Company, to identify the benefits of responsible mining and the new mining project envisaged for the country.

Q: What are the changes contemplated by the new mining law proposed by the government?

The important point of the new mining law is the establishment of new rules that allow the State to assume a regulatory and controlling role in all aspects of mining, as established in the constitution, to generate an adequate and effective direction of mining in Ecuador.

Q: How is the socialization (i.e. public awareness campaign) of the new law working?

We have spoken with many groups, communities, municipalities with a view to discussing the application of this law. We believe that it is important to converse with all people and indicate the way in which we propose having the dynamics of mining here in Ecuador. With the new law we will be more careful with the environment and communities that are around projects will be the first to benefit from those projects. Among the townships we have visited is Zamora, where we had dialogue with the Shuar community, mayors and the prefecture. It was an interesting dialogue with the small-scale miners. I think the way in which we continue these conversation allows us to be understood.

Q: Regarding the creation of the State Mining Company (Empresa Nacional de Minería, ENM), what are the objectives and benefits?

The ENM will be the equivalent of PetroEcuador (note: state oil company) in the mining sector. This entity will be charged with the control of the main mining projects and will run all the strategic agreements and alliances with different types of organizations, including the local communities, to achieve a better development of mining in Ecuador.

Q: What does 'responsible mining without affecting the environment' mean?

The environment will always be affected by any human activity. What we are looking for is responsible mining, with the least environmental effects possible, via the use of technology, by adequate mining methods and evidently in terms of safety of workers and security and health of localized communities.

Q: Have dialogues have been started with different communities regarding mining exploitation?

We have established a cluster of strategic projects around which we are going to begin this new project being put forward by the government in which the State has direct talks with the communities. We have started in the Zamora region and we are going to start in various zones of coastal Ecuador in order to develop in a correct way this process that is fundamental for the development of the country.

Q: What are the economic benefits once mining investments arrive in the country?

Ecuador is going to enter into an important process of resource management and once the exploitation begins it will mean an income flow for the State. But not only for the State, also for the communities that live around the projects. This is very important because it implies an effective change in the quality of life for the people in these zones.

Q: What are the new projects of mining exploitation that will start in the country?

We have various types of projects. Some are projects that are currently developing with Canadian companies, this due to the fact that in Ecuador we do not have much experience in the mining sector, but simultaneously we want to begin developing projects managed by the state via the ENM and in conjunction with other countries. For example with Chile and its CODELCO company we have an agreement to begin mining development in certain areas. Therefore we have many ways to establish the mechanisms through which we will develop mining exploitation. The State can also establish agreements with mining organizations in those zones we consider convenient. That is to say we have a wide and diversified vision in the way we are looking towards mining and we believe that mining must be developed here in Ecuador. At the moment we have agreements with Canada that has some investments that are beginning to happen, with Chile and we hope to amplify these agreements with several other countries.

Q: Will the ENM be charged with regulating and controlling the programmed mining projects?

No. The regulation and control of all aspects of mining will be done by the new Agency of Regulation and Mining Control (Agencia de Regulación y Control Minero). This new organization will, in the name of the State, have the task of regulating and controlling mining at all levels. The responsible and adequate development of mining is something that very much favours the State and Ecuador. We believe that by doing it in an adequate way, exactly the way we propose, taking into account care for the environment and that the communities obtain direct benefits from these projects, it will have a very positive and important impact to the future of Ecuador. For this reason we believe that in general terms the proposal of mining development we are putting forward is a proposeal that is totally different to the way mining has been managed up to now in Ecuador. We are building a different country, transforming our country and also its mining.

Ecuador's mining law passed and rubber-stamped

Last night Ecuador finally got round to approving its new mining law that includes the two minor wording adjustments made by Studmuffin. It's now law. Period. Back to work everybody, let's get mining.

By now you people out there should know that I prefer Dynasty (DMM.to) as the method of investing in the Ecuador mining sector, but if you want a full rundown of potential beneficiaries, Silvia over at Ecuador Mining News has this useful list of miners with Ecuador exposure.

DYODD, dude.

Chill out man.....take it easy.....it's only a mining law, dude

The two assembly members that arrived late for the debate
after driving 84km in first gear.

Even when your President is in your face and screaming that there isn't a single day to lose, old habits die hard.

Today Ecuador's Congresillo was supposed to pass the tiny veto/adaption that Studmuffin made to the mining law so that it could get moving, signed in and made the working law. However only 38 assembly members turned up for the debate. Thus quorum wasn't achieved and the whole thing is now postponed til Monday. The absent parliament members from the ruling PAIS party blamed their absence on internal party elections, but assembly chief Fernando Cordero (that's not him below) was pretty miffed all the same and has laid a U$180 fine on all the lazyasses that didn't bother to come to play which was pretty uncool and breadhead of him, dontcha think?

So until Monday......just chill........... yeah? Cool.

Ecuador's mining law; the passage and the protest

A quick update; yesterday Studmuffin said he was changing a small (and inconsequential for foreign mining companies) part of the new mining law and would sign it into law this very week. Just part of the i-crossing-and-t-dotting mentioned last week.

Meanwhile, today's protests organized by indigenous umbrella group CONAIE is taking place as scheduled, with roadblocks reported in the main Panamericana North highway to Colombia as well as the Azuay region that was the centre of last week's protests. Importantly and fortunately, CONAIE has said that it wants and is getting peaceful protests from its supporters.

This afternoon the protest is due to take the form of marches and town square meetings around the country. All in all, the whole thing is going as expected; CONAIE gets to play protest politics and appeases its anti-mining members without upsetting Correa or its pro-mining members too much and then the mining law becomes active a few days later. What they call down here "un negocio redondo".

Ecuador: Mining Law Approved

Yep, despite the protests from small but vociferous groups of treehuggers and the people that they'd either bribed or brainwashed, it's going on the books.

Last night Ecuador's new law passed its second reading and is now headed up to the executive (i.e. the Muffin) for final i-dottin-and-t-crossin. As this next part is a simple formality we can say for all intents and purposes that the law is on the books and miners can get back to doing what they do best; mining. Here's the official Ecuador Assembly report link.

So let's watch that DMM.to chart today and see if it can't get a bit closer to the gap shown in that previous post. And let's also spare a thought for the Aurelian shareholders who were royally screwed by a self-serving board of directors last year; what price ARU.to today if it still existed?

But my best and warmest thoughts are for Ecuador itself; it might have been an extremely drawn out process, but Correa has done great service to his country via this new law. It banishes the speculators and wide-boys from the scene, it protects the environment (I mean, woe betide any miner that tries to cut corners on this piece of statute) and it will allow Ecuador to grow as a country in a responsible way. Correa might have made a grand-scale error with the bonds issue but this law is a net positive for him, his eventual legacy and his country. Applause.

Correa speaks, Congress listens

"NOW! I SAID NOW BITCHES! I'VE STOPPED MINING IN ECUADOR FOR TWO WHOLE
YEARS AND NOW WE CANNOT WAIT UNTIL THURSDAY COS I SAY SO"

On Saturday, during his weekly radio address (this time while sitting in Cuba) Studmuffin said that he wanted the new mining law approved as soon as possible.

Thus kingy speaks and his minions listen. Word was that Congress had slated in Thursday 15th....early Saturday Congress head Fernando Cordero was quoted as saying Wednesday 14th. but now suddenly the debate for the second reading is happening Monday 12th January at 2pm.

Yep, that's tomorrow.

My thanks once again to regular reader DMMwatcher who does a far better job of noting what's going down at the Ecuador congress website than I do and is kind enough to send his discoveries over. Hat tip to you.

More on Ecuador's anti-mining protests

Here's the link to a good report from Daniel Denvir in Upside Down World that chronicles some of the protests seen in Ecuador this week about the passage of the new mining law.

The report is biased towards the plight of the protestors and that's all right by me, though to its credit does give the other side of the story further down the note. I've mentioned previously that Denvir does a good job reporting on Ecuador and that hasn't changed. Do read for yourself about the reported police repressions that sounds pretty severe and make up your own mind. But most interesting is paragraph five that reports on the CONAIE national executive position. Here's the extract:

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

After emergency meetings on January 7, the Confederation of Indigenous Nationalities of Ecuador (CONAIE) called for a national mobilization on January 20, calling the government “dictatorial.” It is unclear whether the January 20 mobilization will spread road blockades to other provinces in central and northern Ecuador. Protesters are demanding a dialogue with central government leaders and for a broad national discussion on mining before any legislation is passed.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

As noted yesterday in this post, CONAIE is a smart, canny intelligent political animal. Note that it calls for its national mobilization on Janaury 20th, by which time the debate would have happened and the mining project voted into law. You telling me that CONAIE didn't know that? Wanna buy that bridge of mine?

This law is going through.

Ecuador 14 January 2008: The Studfather

Note down 14th of January in your bizdiary, esteemed lector of IncaKuloNews.

• January 14th the most likely date for the second debate for Ecuador's new mining new is set to happen. Got the date, invitations have been sent out, the hall has been booked. The second report was approved 4-0 this afternoon (one abstention from the arch-socialist on the Congresillo). The law project now has to wait 48 hours for any observations to be added from third parties, then it must be debated in full session within five days. That means Friday is the limit, but word is that Thursday is the day.
  

• January 14th is the deadline that Studmuffin has given FinMin Viteri to announce how Ecuador wants to run its defaulted bonds buyback. She says there are still plenty of options on the table and is now working against the clock. Here's El Comercio with the whole story in Spanish (run it thru Google translator if you're Castilianly challenged).
  

More on the miners: As for ongoing rumbles and protests, yesterday was another day of skirmishes between anti-mining protestors and The Studfather's enforcement brigade. One journalist was taken hostage by the protestors for a while but then released. Sticks and stones were thrown at 20 cops until another 50 turned up and things went quiet. There is no big, organized voice-of-the-people against mining going on, but plenty of photo opportunities for the treehug brigade to take photos and handwring themselves into a frenzy.

The most notable absentee from the protests has been CONAIE national executive. The indigenous umbrella group has made anti-mining noises from the sidelines but hasn't actively joined in the protests. This is pretty significant, as although CONAIE has the manpower to help bring down governments if it wishes (check the history books for proof), it's also a canny operator and knows how to play the realpolitik game. There are enough indigenous members of CONAIE that want mining development to go ahead (those local groups have been hanigng round a welcoming Congress all week) and so CONAIE has backed off the full commitment protest, it seems. Put simply and without beating around the bush, this means the law is going to pass next week. Period. No ifs, no buts, no stupid comebacks from people who don't know about Ecuador.

From there we'll have a period of i-dotting-and-t-crossing and it should be on the books by the end of the month. Bought DMM.to today? Looks like somebody did!

So what does Dominic Channer of Aurelian think of Ecuador's new mining law?

Dominic Channer (for it is he)

This morning, Aurelian's (now a branch of the Kinross empire) President Dominic Channer spoke on Radio Quito. Here are a few direct quotes from the interview (via OttoTrans™):

"We have followed with great interest the advance of the mining law and we have participated at several points in the mining debate to present our opinons."

Channer then pointed out that the debate goes ahead tomorrow and made a point of mentioning that the law has changed from organic to ordinary. Then there was a whole section about the contentious issue of water (one of the battlegrounds for the treehugger NGOs that have been brainwashing locals about the big nasty miners). Channer said;

"On the subject of water, we see this as a fundamental issue in the law and the fact that there will be many controls with a new water law. We see this as extremely important in the mining sector."

Next came talk about the environment in general. Channer again did himself a service by telling it like it is.

"I think it's important everybody understands that mining has an effect on the environment, but the same as any human activity, any industry, agriculture, daily human life affects the environment. The important thing is how we manage these impacts, and that is why the standards used by modern mining and the control applied by the State are so important."

"(The new law)..has many controls and is much better in this aspect than the current law. This is why a new law was created that has all necessary controls in the environmental area, the social area, the labour area. It's very important people understand that the new mining law takes cares of these uncertainties and is the result of over a year's work."

All in all, a good job done in the interview by Channer and kudos to you, sir. By the way, it's news to me that the debate will go ahead tomorrow (I thought it was just the report handing-over ceremony tomorrow)...let's hope that's true. The sooner the better, I say.

UPDATE: Silvia Santacruz of Ecuador Mining News clears up the slight confusion. Thanks, Silvia!

Hey Otto,

The Assembly's Economic Commission will present their observations to
legislators, tomorrow. Then, they will have two days to read it, and then the mining law will be presented for second debate. Here is the link to the Assembly's website.

http://www.asambleanacional.gov.ec/index.php?option=com_content&task=view&id=16811&Itemid=1

Ecuador mining law update

Petsain (right) and assembly head honcho Fernando Cordero on Monday

Things are beginning to move in Ecuador concerning the mining law. There are quite a few bases to cover, so here we go with bullet points:

• The report that will be used as the base for the second assembly debate is handed over to the parliamentarians tomorrow. We can expect the debate next week. Remember, if it gets through the debate next week (and there's little reason why it shouldn't) then it becomes law.

• The law is now very likely to be non-organic. This means that other laws can be applied to the mining sphere and may complicate matters for some. In the case of my preferred vehicle Dynasty (DMM.to) there's nothing to be worried about (there...I've stuck my neck out on this).

• Over the last two days, enviro protestors have been protesting in the southern districts. Things turned a bit nasty yesterday and the protests got violent. In total 12 police were reported injured in clashes and one police medic was taken hostage by the protestors. The hostage was apparently taken to use as a bargaining chip to get arrested colleagues out of jail. The medic dude is in no danger here, it should be stressed.
  

• Protests are continuing this morning but less vociferous. The gov't has shipped an extra 140 police into the area and schools etc are open as normal for the first time this week (70% attendance rates reported).

• Indigenous umbrella group CONAIE (national executive) has not been directly involved in these protests but yesterday expressed their support and called on the law to be delayed and for a national debate. It should be pointed out that CONAIE has used the same tactic in previous moments and the government has always replied that the consultation process before the proposed law was published was extensive and thorough. CONAIE also made their usual anti-transnational (i.e. gringo) noises.

• Meanwhile this link takes you to a report of the visit to parliament by Paúl Petsain, president of the Shuar Arutam people from the Cordillera del Condor region (where the DMM, K, CTQ etc etc projects are located). He expressed his support for the mining law, disagreed with the CONAIE-backed protests and is happy that minor changes are being added to the second debate paper (mainly about artisan mining support proceses). Run the Spanish language link above through Google translator; a very interesting and positive article. I remind you that the indigenous voices closest to any mining project are the most important, with the larger national executive's position being less important. This may seem counterintuitive to some, but it's the way it is.

The bottom line here is optimistic; the protests from enviro-group locals are bound to continue during this week and next but they will not affect the passage of the law. The date is all but set for the second debate and once that happens we'll basically have our active law. It looks like DMM.to's prediction of commissioning at the end of March is going to come true.

Protests against the passage of Ecuador's mining law....

Photo of the road block this morning from Ecuador's El Comercio

....have been pretty subdued so far.

Right now the law is in a transitory committee stage, between is successful first reading and the second reading due next week. Without complicating matters, it's fair to say that if it passes its second reading it becomes law as stands (just need some rubberstamping here and there).

As for protests, yesterday there were "dozens" (reports El Comercio) of protesters that descended on the Congresillo building carrying banners saying "Viva la Vida" etc (thanks to a band that appeals to those that don't understand Radiohead, there's no need to translate that one).Then this morning a roadblock was set up by indigenous protesters that blocked the main highway between Cuenca and el Oro (the main mining district part of Ecuador). Ironically, those that damn the miners for crimes against environmental humanity used burning car tires to block the roads.....nothing like a bit of black smoke to draw attention to yourself, is there? Police opened the road quickly, then it was blocked again in a different part...then opened again, then blocked, then re-opened etc etc.

Quite frankly, these people don't know what they're protesting against. As a legal framework to provide solid rules and safeguards against pollution, the new law is a good document and this government is bound to come down heavily on any mining company stupid enough to try and cut corners on the enviro aspect (just ask Chevron). There are still "dirty" mining companies (such as PTQ.to, recently fined $1.9m for being a shame on the face of Panama), but the 21st century has mainly left these relics behind, especially when it comes to new operations. I'm very pro-enviro causes and also very anti-polluters of all types (especially miners), but common sense needs to be applied, too. It all boils down to the two words that President Correa uses when talking about mining, "responsible development". He's got it right.

UPDATE: The second passage is now slated for the first week in January. Perfectly acceptable IMHO.

Bad news for Ecuador-haters

Isn't it strange how people vent anger by demonizing a whole country? Anyway, that slight non-seq aside, here's a couple of snippets from the land of the Muffin:

1) The new mining law has passed its first reading. It now spends a week in committee before going to the second debate. If it passes debate two (which should happen before the end of December, but relax and smell flowers if it doesn't happen til January, yeah?) then it just needs the Congresillo rubber-stamps and its a done deal. Were you warned and did you have the time to take advantage? Yes you were. The good news is that there's plenty more to come. If you want a copy of the 3mega 88 page Spanish language PDF that was debated in the assembly, send me a mail; I don't see why I should be the only one to suffer ;-)

2) Correa isn't dropping the dollar. Bloomie (via Stephan Kueffner, who along with Alonso Soto at Reuters Ecuador does a good job in covering the country) notes in a Radio MUFN soundbite yesterday, Correa said, "It would be stupidity to drop the dollar under these circumstances."

Where does that leave Alberto Ramos of Goldman Sachs and his "I would not make a bet that we will have dollarization in three to five years?". Well, it just highlights what a hedged and non-commital statement it was in the first place. Certainly far more wishy-washy than the screaming "Ecuador May Be Forced to Scrap Dollar After Default" headline slapped on top of the story. The authors? Oh wow! Lester "ring the usual suspects" Pimentel and Matthew "balance is for suckers" Walter. Tell 'em what they want to hear, boyz........



PS: thanks once again to reader DMMwatcher, who is keeping tabs on the mining law's passage far more closely than me and gave the headsup about the first passage yesterday afternoon. He shows me up as the slacker that I am, but I'm grateful all the same :-). And with a handle like his he's probably be a bit richer after this week's market action, too :-)

Dynasty Metals (DMM.to): Be long now

Today in Ecuador, the congresillo continued to take arguments from both sides about the new mining law. Indigenous movement CONAIE spoke today and asked for the law to be suspended. The arguments used by CONAIE were varied, but included the need for a full dialogue with the people to be affected by any mining development as its mainstay line. In the rebuttal period of the debate, the government argued that before the law was presented there were full consultations with all groups to be affected by mining activities.

Two conclusions drawn from today's Congresillo session:

1) The government made much the better argument to the members of Congresillo.

2) The simple fact that the debate continues and the congresillo is spending sequential days on the issue shows the mining law is now close to being approved.

This means that here I am, once again, banging on the table, doing my best Jim Cramer impersonation and telling you that YOU HAVE TO BE LONG DYNASTY METALS (DMM.to). And this isn't because I'm long, either. As a matter of fact I still have no position in the stock as yet. I've been looking to get long the last two days, but with such sketchy volume I haven't hit a fill.

If you prefer, use Corriente (CTQ.to) (ETQ) as your vehicle to play the imminent approval of Ecuador's mining law, but the value investor that dwells inside me cannot ignore DMM.to at these prices. This is one of those trades that don't come along very often, and when they do you want to be there. It's the right stock at the right time. I'll leave it up to you to play either for the short term pop or get in for the longer haul. All I know is that DMM.to right here right now is the most wonderful buy and I'm staking my reputation as a fundamental analyst and a close watcher of LatAm politics on that statement.

I'm very much in favour of social equity, as plenty of the posts on this blog witness. However I'm also an equities analyst by trade and my capitalist roots are strong. It's time to make a profit. Which brings me to the pitch, as I'm still trying to raise money for the Barbie doll's house my daughter wants for Christmas. Today I sold six copies of my NOBS report on Dynasty, which is a good start but I need to sell a few more. I'd also like this blog to pay for itself a little.

If you want to support IKN and do yourself a big favour at the same time, here's your big chance. To find out the details of DMM.to and why the fundamentals are so great will cost you the princely sum of U$10 (not even the commission you pay on a trade). The report crunches the numbers and shows you what DMM.to is capable of, even under a heavy tax burden and even with gold at $800/oz (or less). If you'd like a copy, my PayPal account is under.....

otto.rock1 (AT) gmail (DOT) com

...... or if you like you can drop me a mail at the same address. Or both. As soon as you deposit U$10 in my account and I have your mail address, the report is yours. However that's the end of my hard sell pitch because I'm telling you now, the reco in the report is the same as the reco in this free-to-read blog. I can't be any clearer or fairer than this. Do with this information what you will, but remember where you heard it. As regular readers know, I don't normally pound on about individual stocks being great opportunities, but this is "shoot fish in a dry barrel" time.

Buy DMM.to. Nuff said.


December 1st, when 6,000 people marched to the doors of the Ecuador Presidential Palace
in support of mining. Scenes unlikely to be highlighted by the treehugger NGOs

Ecuador: I'm actually kind of disappointed so far...

¡PIÑATAAAAAA!

...with the response to yesterday's note. Only one person has cancelled his e-mail subscription in a huff (claiming to have lost X amount of money and having been ripped off by the locals left right and centre etc etc) and in fact subscriptions on RSS actually went up by a total of nine yesterday, so maybe I wasn't being offensive enough. I even had two mailers agreeing with my point of view (though hatemail/condescending attitudes have been in the majority so far). Part of the cancelling sub's rant (I have to remind myself that the subscription is free at this point) was to say that a reasonable return is needed to invest in a risky country like Ecuador. I mean, where do you start with someone who thinks they're intelligent but doesn't have the first clue about what you're trying to say?

Y'know, I'm not against greed as such. What I'm against is hypocrisy and dishonesty. When someone says outright 'I'm in it for the money' that's fine by me, as people honest with themselves and straightshooting with others tend to be good people and make up for rampant capitalism by doing good in other areas. But those people who put on the "oh but I care" talk, and explain that one of the reasons they chose to invest in this, that or the other poor country is to help society soon change their tune if they lose out via their own back pocket.

It's hypocrits I can't stand, not upfront Gecko-like greedies.