Bear Creek Mining (TSX-V:BCM) was in damage control mode Monday after the Peruvian government revoked mineral concessions covering its Santa Ana silver project.
The Vancouver-based company saw its share price drop 25% to $3.88 Monday, as company president and CEO Andrew Swarthout said the Peruvian supreme decree halting the development of Santa Ana was akin to expropriation.
Still, Swarthout remains positive the company and the government can reach some understanding to allow the project to go ahead.
“The company still believes a political solution is yet possible,” Swarthout said during a special conference call held to address the situation.
The Peruvian government’s decision to reclaim the company’s mineral concessions comes nearly a month after the Peruvian Ministry of Energy and Mines suspended the project’s environmental and social impact assessment.
Bear Creek said the rationale for the new decree “stems from the prolonged anti-mining protests” in Peru’s southern Puno region.
The protests began in the run-up to a tightly contested presidential election.
Ollanta Humala, a leftist former army officer, was elected June 6. See “Mining companies wary of new Peruvian leadership” – BIV Business Today, June 8.)
“Santa Ana exemplifies exactly the kind of environmentally sound mining project that president-elect Humala needs to achieve in order to achieve his goal of further reducing poverty in Peru,” Swarthout said.
As the company’s share prices fell, Swarthout reminded investors that Santa Ana represented only 20% of the company’s silver reserves.
The other 80% of the company’s precious metal reserves reside in its Corani project, which is also located in Peru but so far remains unaffected.
Bear Creek has said it will “immediately and vigorously” defend its rights at Santa Ana.
Joel McKay
Twitter: jmckaybiv