Costa Rica’s new president extends moratorium on gold mining

Within hours of taking the helm of Costa Rica as president-elect on May 8, President Laura Chinchilla reportedly signed an extension of a moratorium on new gold mining projects that her predecessor, Oscar Arias, had originally signed in late April.

Local media is reporting that the moratorium suspends development of new open-pit and underground gold mines that use mercury or cyanide in the extraction process. The same media reports also note that the moratorium will not affect Infinito Gold’s (IG-V) Crucitas gold project because it already has a government-issued permit.

Reuters news agency also reported that Crucitas, near Costa Rica’s border with Nicaragua, would remain unscathed by the moratorium, quoting a government spokesman.

“The company believes these reports to be accurate but will only be able to confirm it once the precise wording of the moratorium is published in the official gazette,” Infinito Gold said in a statement on May 10.

Infinito Gold’s stock edged up half a penny to 31.5¢ on May 10 and on May 11 closed at 36¢ per share.

No work is currently being done on the project, however, as environmentalists have renewed their complaints that a mine would wreak havoc on local plant and animal life, after the Costa Rican Supreme Court ruled on April 16 that the company could go ahead with its open-pit mine.

If the mine does go ahead it will be Costa Rica’s biggest-ever gold mine but likely its last large mine.

Crucitas is believed to have 1.2 million tonnes of indicated resources grading 1.32 grams gold per tonne. A bankable feasibility study on the project outlined an after-tax 35% internal rate of return (IRR). The company has environmental and exploitation permits and has purchased a 7,500 tonne-per-day mill. Capital costs for the project are an roughly US$66 million.

At presstime, Infinito Gold’s shares were 34¢. The junior has a 52-week trading range of 13.5¢- 46.5¢ and 123.7 million shares outstanding.