December 5, 2008 / 10:48 PM / 11 years ago

Panama Petaquilla gold mine to start production soon

PANAMA CITY, Dec 5 (Reuters) - Vancouver-based mining firm Petaquilla Minerals Ltd PTQ.TO will begin producing gold at its Molejon project in Panama within weeks, the company said on Friday.

The concession is expected to produce an estimated 100,000 ounces of gold by the end of 2009 and maintain those levels for at least six more years, Chief Financial Officer Bassam Moubarak told Reuters.

“We will start production before the end of the year,” Moubarak said.

The announcement comes after lengthy delays and a series of environmental complaints about the mine linked to cyanide and deforestation. Originally the project was supposed to begin production in January this year.

Petaquilla now has permission from Panama’s environmental regulator to go ahead with the project, Tom Byrne, the company’s spokesman, said.

A massive copper project with the same name was spun off from Petaquilla Minerals and went public in 2006. Canadian company Inmet Mining Corp IMN.TO is in the process of wrapping up an acquisition of a majority stake in the project, the largest copper deposit in Panama.

The Petaquilla gold mine will be the first major site to begin production in the country, although a slew of other proposals have been put forward during the commodities boom.

Although rich in minerals, Panama’s tropical climate and the remoteness of some of the sites has long made large-scale exploration unattractive.

The dramatic drop in metals prices in recent weeks and the squeezing of credit due to the global financial crisis has again put the development of some projects in doubt. (Reporting by Andrew Beatty; Editing by Christian Wiessner)

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