The Panamanian Ministry of Commerce and Industry declined extension requests submitted by Orla Mining Ltd. (TSX: OLA; NYSE: ORLA). The company requested three mining concessions in the country, introducing a layer of uncertainty surrounding its operations.
The rejection comes in the wake Law 407, which the National Assembly of Panama passed Nov. 3 . The law imposed a moratorium on granting, renewing, or extending concessions for metal mining activities in the country. Orla Mining had been closely monitoring the implications of Law 407 and other developments on the Cerro Quema Project.
The area is declared a reserve under the Panamanian mining code.
The Cerro Quema Project is situated on the Azuero Peninsula in the Los Santos Province of Southwestern Panama. It was at a pre-feasibility stage, encompassing an open-pit, heap leach gold project, a copper-gold sulphide resource and various exploration targets. Despite the potential social and economic contributions to the host communities, the Panamanian government’s decision puts the project’s future in jeopardy.
Minera Cerro Quema, S.A., a subsidiary of Orla Mining, received three resolutions from the ministry on December 15. The resolutions cited the expiration of concessions as the reason for cancellation and designated the area as a reserve under the Panamanian mining code. Notably, mining concessions cannot be granted on a reserve area, as outlined by the country’s mining regulations.
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Orla to continue observing situation in Panama
Expressing regret over the decision, Orla Mining emphasized that it would continue to closely observe the evolving situation in Panama. However, the company asserted that it would refrain from allocating additional funds toward the Cerro Quema Project until there is greater certainty regarding mining concessions and overall fiscal and legal stability in the country.
Having invested over US$120 million in Panama to date, Orla Mining highlighted the potential economic benefits the Cerro Quema Project could bring. Orla cited the potential for employment opportunities, skills development, and contributions through taxes, royalties and other fiscal avenues.
The company also stated its intention to explore all legal remedies to protect its historical investments and pursue avenues for stakeholder value.
The future of the Cerro Quema Project now hinges on the resolution of legal and regulatory challenges. Meanwhile, Orla Mining remains prepared to navigate the complexities to safeguard its interests and stakeholder investments.
Other companies with operations in Panama include Franco-Nevada (TSX, NYSE: FNV), Antler Gold (TSX-V: ANTL) and A.I.S. Resources (TSX-V: AIS).
