Argentine Protesters Win Temporary Freeze Of Osisko Mine Project

djones






--Stiff resistance from residents and activists leads governor to suspend
Famatina project


--Barrick Gold abandoned Famatina in 2007 amid protests


--Governor say he remains backer of mine, will use delay to educate public


--Argentine glacier-protection law threatens other mining projects



By Shane Romig


Of DOW JONES NEWSWIRES



BUENOS AIRES -(Dow Jones)- The governor of Argentina's La Rioja province has
temporarily suspended a gold mine project headed up by Canada's Osisko Mining
Corp. (OSKFF, OSK.T) amid snowballing resistance from environmental activists
and residents.


"As long as the people are against it, there won't be any activity at
Famatina," Gov. Beder Herrera told the local press in reference to the project.


In August, Osisko signed an agreement with La Rioja to develop a gold mine in
the Famatina region, which has long enticed and challenged companies seeking to
bring projects to fruition. Osisko agreed to pay $500,000 to the provincial
government company Energia y Minerales Sociedad Del Estado, or EMSE, and then
invest $10 million over the next four years to conduct a feasibility study.
Osisko will receive a 70% stake in the potential mines, with the rest held by
EMSE.


But residents of the area have blockaded the road leading to the site since
early January and an estimated 10,000 people marched on the governor's office
this week calling for the contract to be called off. Protesters claim Famatina
and a number of potential uranium-mine projects will pollute and sap up precious
water needed by residents of the high, dry province.


A spokeswoman for Osisko said the company was preparing a response, but had no
immediate comment. A spokesman for Gov. Herrera didn't immediately respond to
messages seeking comment.


Herrera is a strong proponent of the mine, but said the development will be
put off "as long as necessary" to "explain" it to the population, according to
local press reports.


Herrera came to office in 2007 after he successfully led an impeachment drive
against his predecessor, Angel Mazza, amid allegations of corruption related to
a contract with Barrick Gold Corp. (ABX, ABX.T) to develop the Famatina site.


Barrick abandoned the plans in 2007 amid stiff resistance from local residents
and has since focused on exploiting its Veladero mine in Argentina and pushing
forward in construction of the massive Pascua Lama mine, which straddles the
border between Argentina and Chile.


A number of companies are pushing forward with large mining projects in
Argentina, but many have faced stiff resistance. About eight provinces have
banned open-pit mining and the use of chemicals common in the industry such as
cyanide, effectively putting them off limits to large-scale mining projects.


However, a number of other provinces, including San Juan and Santa Cruz, are
strongly in favor of the industry. Earlier this month, Rio Negro province joined
La Rioja in lifting a ban on open-pit mining and the use of cyanide.


But a strict federal glacier-protection law threatens to derail a number of
projects by limiting economic activity in the areas surrounding glaciers. The
government has started conducting a nationwide inventory of glacial ice to
determine which areas to protect. The full study is expected to be completed in
five years, with preliminary data available later this year.


Local environmental groups charge that a host of projects are violating the
law by affecting the ice, allegations denied by the companies and the federal
mining ministry. The glacier law is facing several legal challenges, with a
number of provinces questioning its constitutionality.


In November, a federal judge in San Juan suspended key provisions of the law
at the behest of labor unions and mining industry associations until the Supreme
Court can rule on its validity.



-By Shane Romig, Dow Jones Newswires; 54-11-4103-6738; shane.romig@
dowjones.com