UPDATE 1-Greystar says Colombia accepts its gold mine appeal

Mon May 31, 2010 12:45pm EDT

Related Topics

* Greystar says mine feasibility study due in October

* Environmental ministry warned against leaching zones

* Stock gains 45 percent (Adds share price reaction)

By Diana Delgado

BOGOTA, May 31 (Reuters) - Shares of Greystar Resources GSL.TO jumped 45 percent on Monday after the company said it won't have to redesign its Angostura gold project in Colombia to conform to new mining regulations in the country.

In a statement, Greystar said Colombia had accepted its appeal against a demand to resubmit an environmental study on the project.

The Andean nation ordered the miner in April to resubmit the study following the approval of a new law forbidding mining in a certain ecosystem -- a decision Greystar said was retroactive implementation.

Frederick Felder, executive vice president of the company, told Reuters by telephone that Bogota had agreed to review its original study submitted in December. The modification of the mining code became effective on Feb. 9, 2010.

Felder said that work on the Angostura gold and silver project -- with construction of a mine expected to begin early next year -- was not affected by the appeal process.

"During these days, we continued our feasibility studies ... we were confident the government was going to accept the study," he said. Colombian officials were not immediately available for comment.

Mining companies have returned to Colombia after shunning the country for years due to rebel violence. Security has improved under President Alvaro Uribe, who sent troops out to drive back armed groups.

The environment ministry said earlier it had warned Greystar that part of Angostura's leaching zones were located on so-called paramo ecosystems even before the new mining code was approved. [ID:nN18158721]

Paramo occurs in the Andes between upper forest limits and the lower edges of snow line, but in Colombia, paramo systems vary depending on the mountain range.

Felder said that the environment ministry had not evaluated whether Angostura's leaching zones were on paramo systems.

Angostura has 10.2 million troy ounces of measured and indicated gold reserves and 3.4 million of inferred resources with 74 million ounces of silver reserves and resources, according to preliminary feasibility studies.

The company plans to complete a definitive feasibility study in October.

Shares of Greystar, which lost nearly half of their value following the April decision, clawed back much of their lost value on Monday.

Just after midday, the stock was up C$1.68 at C$5.44 on the Toronto Stock Exchange. (Writing by Jack Kimball; Additional reporting by Cameron French in Toronto; editing by Peter Galloway)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.