Lawyer: New mining law hinges on new constitution - Ecuador Published: Monday, September 8, 2008 18:24 (GMT -0400) By Harvey Beltrán, SendPrintReprint Permission

The details of proposed changes to Ecuador's new mining law will only be made known after September 28, when the country's constitution is put to a vote, mining lawyer Patricio Ruiz told BNamericas. Related content Companies / Entities Aurelian Resources Inc. Corriente Resources Inc. IAMGOLD Corporation Kinross Gold Corporation International Minerals Corp. Keywords Government/Regulations The lawyer's comments come in response to a rough draft of the mining law posted on the website of Ecuador's mining chamber (CME) that indicates the government could be considering a 3-8% scale on mining royalties based on company sales, among other issues. "I think we still have to wait for the constitution to be approved or rejected in a vote before learning about the new mining bill," he said. The danger is that any mining bill that appears prior to the constitution's approval might cause a contradiction and be declared unconstitutional, Ruiz explained. On the other hand, if the new constitution is rejected, it will be necessary to draft a mining bill that corresponds to the country's current constitution, said the lawyer who is part of the Ruiz Giraldo law firm in Quito. "It's an uncomfortable situation and it's irritating to not know the details of the bill but I think it's necessary to be tolerant and hope the process is not drawn out any longer than the end of September," he said. DRAFT BILL According to the draft bill that CME published on its website, the new law will impose more environmental controls and will limit the exploration period to eight years. However, the president of the Guayaquil mining chamber, César Mancheno, believes the draft bill is just one more version among several that have already gone public. "The mining sector asked to know the basis of the mining law but it still isn't clear what the reform contains," he said. Regarding the draft bill that CME published, he said, "we have already reviewed around five bills and I do not oppose it because I really do not know which one is going to win out," he said. REFORM IS NO GOOD FOR THE SECTOR Although the details of the mining law are unknown, "some draft bills are in circulation and based on comments by authorities at the mining chamber and other experts, we agree that it's completely negative for the sector," Minera Cachabi CEO Allen Brown said. Minera Cachabi is a local miner holding exploration agreements with Canadian companies, "but we are frozen right now," the executive said. Companies working in Ecuador include Canadians Aurelian Resources (TSX: ARU), which is being absorbed by Kinross Gold (NYSE: KGC, TSX: K), along with Corriente Resources (TSX: CTQ) and IAMGOLD (TSX: IMG, NYSE: IAG), as well as US-based International Minerals (TSX: IMZ). On Monday afternoon, IMZ shares were down 2.0% at Cdn$4.39, Kinross was down 5.6% at Cdn$14.30, IAMGOLD had fallen 1.2% to Cdn$5.86 and Corriente was down 1.9% to Cdn$4.23, all on the TSX.