January 24, 2011 / 8:34 PM / 8 years ago

Greystar: Colombia gold plan won't hurt ecosystem

* Greystar says to implement highest standards in project

* Environmental body says water supplies endangered

* Second public hearing scheduled for March 4

By Diana Delgado

BOGOTA, Jan 24 (Reuters) - Canadian gold miner Greystar Resources GSL.TO said on Monday its gold and silver Angostura project in Colombia poses no threat to the ecosystem amid growing opposition from local authorities.

Colombia is studying whether to grant a license for the project but Bogota has already accepted that the company does not have to resubmit its environmental study to conform to new regulations in the Andean nation.

“There is no danger to the city of Bucaramanga or any other small municipality in the vicinity,” Greystar President and CEO Steve Kesler told Reuters by email.

“The project as designed provides the maximum benefit to the economy, job creation and can be carried out with care of the environment,” he added.

Greystar will have a second public hearing on March 4 after which the environment ministry will decide on the license.

Colombian state ombudsman has recommended the government consider rejecting the license. While Bogota is not obliged to follow the recommendation, it usually abides by the request, said Jose Fernando Restrepo of the brokerage Interbolsa.

“There is a high probability that the government does not authorize the environmental license for the proposed project,” Restrepo said.

Greystar planned to start construction of the mine early this year. Output of gold and silver was expected to begin in the second half of 2012 with an average output of 2.3 million ounces of silver per year over a 15-year mine life.

Colombia, once written off as a failing state mired in drug violence, is enjoying a resurgence in oil and mining investment as its long guerrilla war wanes and companies return to explore in areas that used to be dismissed as too dangerous.

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 studies.

The local environmental authority for the city of Bucaramanga (CDMB), some lawmakers and the state’s ombudsman oppose Angostura. Foes argue that the project would hurt the delicate paramo ecosystems. They say it would threaten water quality, plants and animals in northeastern Santander province.

“The project as it is proposed is not feasible. They have to find another alternative ... it cannot be an open-pit mine,” said Elvia Paez, general manager of the CDMB.

Paez said that an open-pit mine would require using approximately 1,100 hectares, of which 53 percent are located above Paramo and the rest in Andean forest.

The project may risk water resources that supply 2.2 million inhabitants as well as the endemic species, she said.

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

Kesler, however, said the company’s studies showed there were no species of flora and fauna in the project’s site that were not also found throughout the area.

If the license is rejected, Greystar could reconfigure the project, including possibly turning it into an underground mine — but that would put the project back two years, Kesler said.

“This means delay in and less investment, fewer jobs and less royalties and taxes,” he said. (Editing by Jack Kimball; Editing by David Gregorio)

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