8:26 AM on June 11, 2013

This comment ....

I suspect Ecuador will come back to the table once it realizes Kinross is serious about abandoning the project. I cannot see anyone else wanting to undertake this mining operation on these terms when the price of gold is as soft as it is.

The alternative for the locals will be to wait until the next upturn in the gold market which could be years away.

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DrGoLeafsGO

10:29 AM on June 11, 2013

This comment ........

I worked on this project and sat at the table during many of these negotiations. This government will not understand that the development conditions are very difficult, the capital and operating risks are very high, the return is marginal (at best). The Ecuador government can only recognize the in situ value. It then gets lost in the belief that this mine will come to production without owner's risk and costs.

Ecuador is a great place to grow shrimps, bananas and pineapples. Mine development? Not so much. Good luck to Ecuador. Its a beautiful place.

Congratulations to Kinross. This is a decision well studied and well concluded.

SADLY FOR FORMER ARU HOLDERS..... THIS COULD HAVE BEEN OUR BIG ONE!

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President Rafael Correa, who won re-election in February, is keen to cut his country’s dependence on oil exports. After his election, Mr. Correa told Reuters he expected to sign a contract with Kinross within six months.

Kinross said it will write down the full net carrying value of the project, taking a $720-million charge in the second quarter, of which about $700-million will be a non-cash charge.

Asked whether there is any way for the miner to recover some of the value of the project, Mr. Rollinson said the two sides seem to be at an impasse.

“I would hope, maybe, if we can have a collaborative transition process, maybe there’s something there. But they have told us they would not support a sale or provide an extension to the license,” he said.

Mr. Rollinson said the recent drop in the price of gold did not drive the decision – the proposed tax at the center of the dispute would only kick in under relatively high prices, he said. He connected the move to that tax, and Kinross’s commitment to “capital discipline.”

Facing a backlash from their investors over pricey takeovers and cost overruns, mining companies the world over have vowed to focus on profits, instead of growth at any cost.

In April, Mr. Rollinson said the Kinross would consider cutting its output to focus on profit margins.