Ascendant can’t escape Junin’s turbulent history

It looked as though history was re-peating itself on Dec. 10, 2005, when a building belonging to newly listed Ascendant Copper (ACX-T) near its Junin exploration project in Ecuador, north of Quito, was set ablaze by a crowd of between 70 and 300 locals.

Eight years earlier, Mitsubishi Corp. (MSBHY-O) subsidiary Bishi Metals, which explored the property from 1993-1997, also had its mining camp burned down, and was forced by the overwhelming unpopularity of its project to leave the copper deposit unmined.

No one was injured in either incident.

But unlike Bishi Metals, Ascendant is intent on staying and making Junin a “win/win” project. One month after the destruction of the company’s Florida demonstration farm, located about 8 km from the Junin project, a meeting between the company and its opponents has been scheduled — including representatives of a local environmental group Ascendant suspects was involved in the arson.

The meeting between the company, the mayor of Cotacachi Cty., and the environmental non-profit organization Defensa y Conservacion Ecologica de Intag (DECOIN), is tentatively scheduled for Jan. 26.

DECOIN says the meeting, which will also be attended by officials from the Canadian embassy, is the result of a complaint DECOIN and other groups filed with the Organisation for Economic Co-operation and Development (OECD) against Ascendant.

While DECOIN says two international observers were present when Ascendant’s building was set on fire, it denies any of its members were there. However, Ascendant says the company has video footage placing a member of the organization at the scene.

“One of their employees was leading the charge,” says Llee Chapman, Ascendant’s chief financial officer from his office in Colorado.

Chapman says the footage has been turned over to the police and that the company plans to press charges for arson, theft of equipment from the building, and assault of two Ascendant employees on-site during the incident. No one had been arrested at presstime, but the company said warrants were being issued.

There are varying accounts of how many people were involved in the attack. While Ascendant claims it was about 70 people, DECOIN says more than 300 people from surrounding communities participated, indicating more widespread rejection of the project.

“I don’t agree with what they did, but I understand why they did it,” says DECOIN executive director Carlos Zorilla. “I don’t believe in violence. However, the people at the community level, they have been pushed beyond reason.”

Zorilla says local people resorted to arson because they are worried that justice will elude them if they continue to fight the project using official channels.

The mayor of Cotacachi Cty., an area of about 35,000 people, has initiated two lawsuits questioning the validity of the company’s concessions. Both were rejected by the country’s Supreme Court.

There’s a division between the Ecuadorian national government, which sees mining as a source of revenue, Zorilla says, and local governments, which are generally anti-mining.

“You have these (national) policies that are totally divorced from reality on the ground. In Cotacachi, we’re trying to promote sustainable development.” Zorilla cites eco-tourism and coffee growing as alternatives to mining.

Based on an environmental impact study by Bishi Metals, DECOIN believes mining at Junin would affect a nearby ecological reserve managed by the community and result in environmental harm to an area rich in biodiversity.

“In Canada, you can stop a project . . . if you find a snail that’s endangered,” Zorilla says. “We’re talking about spectacled bears, jaguars, pumas, brown-headed spider monkeys — some of these species are critically endangered. So we’re talking also about biological jewels.”

Chapman says the company is not aware of any endangered species or historical artifacts that would prevent the development of Junin.

He adds: “We have all the right to do what we’re doing, as long as we meet all the standards and follow all the rules.”

Chapman admits some families would have to be relocated if Junin becomes a producing mine.

Based on previous drilling by Bishi Metals, Ascendant says Junin hosts about 8.7 million tonnes copper in an inferred resource of 982 million tonnes grading 0.89% copper and 0.04% molybdenum, 1.9 grams silver and 0.01 gram gold per tonne, using a 0.4% copper cutoff. At a 0.2% copper cutoff, the resource rises to 1.3 billion tonnes grading 0.73% copper, 0.03% moly, 1.6 grams silver and 0.01 gram gold per tonne. Ascendant began acquiring concessions in the area in 2003, but has not conducted any exploration of its own.

“This has the potential to be quite large, even though we’re just in an exploration phase right now,” Chapman notes.

The project has been the source of major conflict within communities and families in the area, says Zorilla; some people (including him) have even received death threats. While he wouldn’t assign blame, Zorilla says, “certainly, none of this chaos reigned before the mining company came.”

Zorilla is also eager to discredit Ascendant’s claims that the Florida farm doubled as a medical clinic for about a month before it was torched, and that the community has asked Ascendant to rebuild the facility. He says the doctor at the clinic was not licensed to treat the public — only Ascendant employees. The company disputes that.

Despite the bad blood, Chapman does not believe opposition to the project will escalate, and says Ascendant is willing to work with the communities to address any concerns regarding the project.

“Ascendant is ready to sit down with DECOIN, all the municipalities and all the stakeholders and take in concerns and solve problems, because we know we can,” Chapman says. “We plan on doing everything by the very best standards.”

Ascendant expects to release its environmental impact assessment for Junin in mid-January, and pending input from stakeholders and approval of the Ministry of Mines, anticipates the start of a 22-hole exploration drilling program (to confirm previous exploration work) as soon as May 2006. In the meantime, Ascendant has hired an Ecuadorian company, Daimi Services, and B.C.-based Wayne Dunn & Associates to help with community relations and to develop sustainability guidelines.

Whether the company can convince local stakeholders of the advantages of mining remains to be seen.

“These are the communities that kicked out Mitsubishi,” Zorilla says. “They are firm in their resolve — they won’t back down.”

Chapman says that the majority of the population actually supports the project — 40% strongly and 40% with “some questions.” He’s hopeful that even some of the 20% he estimates the “radical” DECOIN to represent can be convinced of the benefits of mining.

“We can solve their problems if they give us a chance,” Chapman says. “If what we’re talking about is noise-making, then so be it; there’s not a lot we can do about that.”

After its listing on the Toronto Stock Exchange on Nov. 22, Ascendant traded around the $1.50 mark. Since the New Year, its average price has dropped to about $1.40.