Exeter dealt blow in Mendoza

Vancouver – By passing legislation banning use of chemicals typically employed in the extraction of gold and other metals, the Argentinean province of Mendoza has thrown a significant impediment in front of a number of companies advancing mineral projects in the region.

The latest move has prompted Exeter Resource (XRC-V, XRA-X) to effectively place its flagship Don Sixto gold project on hold pending a hopeful amendment of the law.

“The new laws in Mendoza Province have evolved in a highly charged political environment in the lead up to Federal and Mendoza provincial elections to be held in October this year,” commented Exeter chairman Yale Simpson in a prepared statement. “We understand that the most recent law was rushed through as a response to well organized and well-funded anti-mining demonstrations and road blocks in an area that has absolutely no exploration or mining activity.”

In December 2006 Mendoza’s provincial congress briefly passed legislation calling for revisions to its exploration and mine development policy and subsequently suspended issuance of any new prospecting, exploration, and mining licences. However within a week Governor Julio Cabos exercised his executive veto power, citing the new legislation as unconstitutional in that the 14-year-old provincial legislation on which it was based had been superseded by more recent federal environmental and mining policy.

Dial ahead to May 2007 Mendoza’s lower house of congress in turn rejected Governor Cabos’ veto, then calling on numerous committees to review the bill. In response, the Governor emplaced a 90-day suspension on issuance of new environmental permitting relating to open pit mining, pending a review of proposed regulations leading to the latest government reaction.

With a growing wine and tourism industry, Mendoza has seen an insurgence of a strong and vocal anti-mining lobby concerned over environmental issues.

Don Sixto is located in a remote, arid region in the far south of the province that has relatively little economic activity, continued Simpson. We have enjoyed tremendous support from the local communities as we have advanced the project. It would be unfortunate indeed if this legislative response to pressure tactics were allowed to deprive these communities of the economic benefits.

In the mean time Exeter plans to focus on its Cerro Moro gold-silver project in Argentinas mining friendly Santa Cruz province and the Caspiche gold porphyry project in neighbouring Chile.

Shares of Exeter slid 20% in June 21st trading to close down 79 at $3.16 apiece.

Another company feeling the effect of the Mendoza flip-flop is Coro Mining that optioned the San Jorge copper project from Global Copper (GLQ-T, GOCPF-O) last year.

Coro was in the midst of closing its $25-million initial public offering and had planned to commence trading on the TSX on June 22nd but has now postponed it.

The company also holds the Barreal Seco project in Chile where it anticipates completing a scoping study for a potential heap-leach copper operation by the middle of 2008.

Other companies holding mineral projects in Mendoza province include:

• Rio Tinto (RTP-N, RIO-L) advancing its Potasio Rio Colorado potash deposit towards the permitting phase;
• Latin American Minerals (LAT-V) with its Cerro Amarillo copper-gold project;
• Portal Resources (PDO-V, PLORF-O) with its Tiger uranium project, San Rafael gold-silver-copper property and the Anchoris copper-gold porphyry project;
• Northern Orion Resources (NNO-T, NTO-X) holds the Los Petisos sulphur deposit;
• Calypso Acquisition (CLP-V, CLPGF-O) has the La Pintada, Huemul and Ranquil uranium projects; and
• Mega Uranium (MGA-T, MGAFF-O) having landholdings in the provinces Sierra Pintada uranium district.

Additionally, the Argentine government is moving to develop the Sierra Pintada uranium deposit.