Eco Oro Minerals Corp., a gold explorer in which hedge fund Paulson & Co. owns 10 percent, plunged the most in 20 years after Colombia granted an extension on less than half the company’s title rights.
Eco Oro fell 55 percent to 88 Canadian cents in Toronto, the most intraday since July 1992. The Vancouver-based company’s shares gained 32 percent this year through yesterday.
Colombia’s national mining agency said in a resolution dated Aug. 8 that it would only extend the title on 46 percent of Eco Oro’s Angostura gold and silver concession because the rest of the land was located on a paramo, which is a high-altitude watershed area, the company said yesterday in a statement. The portion of the concession that wasn’t extended contains about 70 percent of the Angostura deposit, it said.
“This resolution may be resolved over time but in the near term it represents a serious impediment to advancing the Angostura project,” John Hayes, a Toronto-based analyst at BMO Capital Markets, said in a note today. “The company’s shares are likely to be weak and volatile until there is clarity and a positive resolution on this issue.”
Eco Oro said it will file for a motion to reconsider the resolution and will “take all other legal steps necessary to protect its legal rights.” The mining agency’s position on the areas constituting a paramo is “inconsistent” with Colombian law, it said.
Eco Oro, formerly called Greystar Resources Ltd., withdrew permit applications in March 2011 for its Angostura mine, which would have produced about 2 million ounces of silver and 500,000 ounces of gold annually, after opposition to mining in the area. The company said at the time it planned a smaller project to take into account environmental concerns.