Canada’s Orla Mining (TSX: OLA; NYSE: ORLA) may take Panama to an arbitration court following the government’s rejection of a permit extension for the three mining concessions in the Cerro Quema gold project.
The Vancouver-based miner notified authorities of its intentions with the hope the move would open the door to talks between the parties, the company said this week. The process would be done under the Panama-Canada free trade agreement and start this quarter, it said.
“If these consultations are not successful, the company expects to file a formal request for arbitration,” Orla said April 10. “The company’s preference is a constructive resolution with the government of Panama that results in a positive outcome for all stakeholders.”
The country’s Ministry of Commerce and Industry in December not only rejected the permits extension — it went as far as to declare the area comprising the concessions to be a reserve area, revoking them altogether.
New law
The cancellations occurred after Panama’s national assembly passed a law in November which imposed a moratorium on granting, renewing or extending concessions for metal mining activities.
The miner, which also has assets in Mexico and Nevada, plans open pit mining of 21.7 million tonnes of ore from Cerro Quema’s La Pava and Quema-Quemita pits. The operation is to be built in several stages and produce 81,000 oz. of gold over an estimated six-year mine life.
Construction would generate 3,600 direct and indirect jobs and 1,200 during operations, Orla estimated. The company’s arbitration tactic was tucked into an update this week on the company’s Camino Rojo oxide mine in Panama.
Shares in Orla Mining fell 2.8% on Friday afternoon in Toronto to $5.54 apiece, valuing the company at $1.8 billion. They’ve traded in a 52-week range of $3.53 to $6.71.
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