Paramo could affect Eco Oro’s Angostura project

Eco Oro Minerals (TSX: EOM) has seen its shares climb in recent weeks, spurred by the Colombian government better defining the boundaries of an environmentally sensitive paramo ecosystem that is near the company’s Angostura gold-silver project.

The junior’s flagship project sits 400 km north of Bogota and 67 km northeast of Bucaramanga in the Santander Department.

On Dec. 17 the company said the delineation of the Santurban paramo ecosystem would be announced in a Dec. 19 press conference held in Bucaramanga. After this announcement its shares more than doubled to 39¢, before the Investment Industry Regulatory Organization of Canada (IIROC) suspended trading in Eco Oro on Dec. 19, in anticipation that the company would release material news.

IIROC lifted the suspension on Dec. 23, a day after the junior reported that the Ministry of Environment and Sustainable Development, led by Gabriel Vallejo Lopez, had approved the Santurban paramo boundaries.

The paramo covers 1,150 sq. km and includes certain areas where mining can take place under stricter environmental regulations. The ministry says the government will optimize agriculture, mining and ranching in the paramo.

Eco Oro’s initial reaction to the results was “pretty positive,” as “it could have been much worse for the company,” investor relations representative Jon Bey says. “But the caveat being we’re not quite sure exactly how those boundaries are shaping up. So we have tasked our technical team to analyze every delineation line and to break it down. It’s a lot more complicated than just simple boundaries. We are working through that right now and hope to have a much better understanding of those ramifications in the near future.” 

Eco Oro says the paramo’s boundaries enlarge the proposed regional park, approved in early 2013. The park already affects 10% of Eco Oro’s 2.2 sq. km Angostura deposit. It has decreased the deposit’s indicated and inferred resources by 11% and 4%. Currently 3 million equivalent oz. gold, or 89% of the indicated resource, and 2.3 million equivalent gold oz., or 96% of its inferred resource, fall outside of the park’s surface limits.

While it’s too early to determine how the new boundaries will affect the project, Eco Oro cautions it may to “some limited extent” impact the project’s development.

“There is not much we can comment on at this point, as the paramo  boundaries have not been clearly defined to the point that we have a full understanding of the impact on our Angostura project,” Bey says. 

The junior, which has been in conservation mode since waiting for the delimitation, is assessing how it could develop the project. It will examine parameters such as cut-off grade, production rates, mining and metallurgy, resource access and the infrastructure’s layout. 

Colombia’s president Juan Manuel Santos has called the delimitation “reasonable and balanced,” as it preserves watersheds and allows for farming and small-scale mining. However, Santos notes that some bigger mining companies were dissatisfied with the boundaries.

In November Eco Oro said that an independent firm hired for an ecosystem biodiversity study in 2013 concluded that the paramo did not exist in the area of the main Angostura deposit. The project also includes five satellite prospects. Bey says several factors led to the government’s decision on the boundaries, including the influence of environmentalists. 

In light of the new boundaries, the company appears firm on advancing Angostura. “We are committed to developing the Angostura project in a socially and environmentally sustainable manner,” Anna Stylianides, the company’s president and CEO, said in a prepared statement.  

Eco Oro shares closed 2014 at 60¢, up 329% from its 52-week low of 14¢ in November.