The decision of the Legislative Assembly to not endorse the bill that seeks to approve the contract between the government and Minera Panamá, shows the fragility of the contracts between the Panamanian state and companies.
The obstacles to the mining project date back several years, since the legal dispute began in 2009, when the Environmental Impact Center (CIAM) filed an appeal of unconstitutionality against the contract granting a 20-year concession to exploit and commercialize the gold, copper and other mineral resources of Cerro Petaquilla.
Adverse court decisions against companies, social and political conflicts and fiscal issues are some of the factors that are impeding the development of productive projects in Central American countries.
One of the latest court decisions affecting companies with investments in the region was that of Minera Petaquilla, in Panama.
Arguing that the basic principles of public procurement were not complied with, in Panama the contract between the State and the company Petaquilla Minera has been declared unconstitutional.
The legal dispute began in 2009, when the Environmental Advocacy Center (CIAM) filed an unconstitutionality appeal against the contract that grants a twenty year concession to Cerro Petaquilla to exploit and sell gold, copper and other mineral resources.
Mining companies and spanish citizens are suing the Panamanian State arguing arbitrary and discriminatory measures imposed by the Martinelli Administration are detrimental to their investments.
The companies Petaquilla Gold, Petaquilla Minerals LTD, and Corporación de Recursos Iberia, S.A. are sueing the Panamanian government for $2.3 billion at the International Centre for Settlement of Investment Disputes (ICSID) of the World Bank for direct damages against the company in Panama and its shareholders, reported Laestrella.com.pa.
The Supreme Court rejects appeal case presented by Petaquilla Minerals to reverse the cancellation of the concession to exploit the gold mine El Molejón.
The appeals filed by the former concessionaire of Molejón in an attempt to recover the concession and invalidate the tender which was called by the PAN for cleaning tailing basins have been rejected by the Supreme Court.
The concessionaire has filed a reconsideration motion to avoid cancellation of the concession, and while it is resolved, the government will take care of the necessary maintenance work.
The review process to be carried out now by the Ministry of Commerce and Industry (Mici) could take up to two months. Once the process has been completed, it will be decided whether or not to cancel the concession granted to the Canadian company Petaquilla Minerals.
The government will assume the cleaning and sanitation works of the washing tubs at the Molejón gold mine, initially estimated at $2.5 million.
While the future of the concession granted to Petaquilla Minerals is being resolved, it was announced that a cleanup operation will be carried out in coordination with the National Programme of Support, consisting in strengthening and waterproofing the slopes, and cleaning the floor and maintenance areas that were abandoned with hydrocarbons.
Although the concessionaire Petaquilla Minerals says it is complying with the requirements of the government, the possibility of canceling the concession is being studied.
The 180 day period which the Ministry of Trade and Industry (Mici) awarded in January to the conessionarie Petaquilla Minerals to resolve its financial problems has come to an end, and the government could revoke the concession granted in 1997.
As part of the restructuring process to reactivate the operation in the gold mine, Petaquilla Mineras has appointed Arenisca Properties S.A. to manage works at the mine.
The company Arenisca Properties S.A., responsible for reviving the mining operation, "... Is a shared partnership between Petaquilla Minerals and the investment fund Baseline Financial Group. " It is anticipated that in one month the program to run operations at the mine will be presented.
The operator of Molejon gold mine in Panama has announced that it has obtained a line of credit of up to $25 million to restart operations from February 1st.
Baseline Financial Group is the company that will provide an initial payment of $10 million, with a progressive investment of up to $25 million, to revive the extraction of gold from the mine. The contract stipulates that 60% of the proceeds will go to Petaquilla Minerals, 40% to Baseline Financial Group and 10% will go to the administration of a trust.
The Varela administration has announced that it will analyze revoking the concession granted to Petaquilla Minerals to operate at Molejón and freeze the paperwork for new mining concessions.
For non compliance with the deadline to deliver the financial results of 2013-2014 the securities commission of British Columbia, Canada, the trading of the shares by the owner of the Molejón mine in Panama has been suspended.
Despite having announced in September changes in company structure and operation of the Molejón gold mine in Panama, the Canadian company Petaquilla Minerals continues to face financial difficulties.
The government of Panama has announced that it will liquidate the assets of the concessionaire of the mine El Molejón in order to pay outstanding debts after the company failed to appear before the Ministry of Labour.
The Securities Commission of British Columbia in Canada, has issued a resolution barring the two top executives of Petaquilla from trading shares of the company until financial information is presented for the period ending July 2014.
Problems continue for Petaquilla Minerals, which breached a salary payment arrangement that should have been finalized in October and it has now been reported that two of its executives have been banned from buying or selling shares in the company.
The Ministry of Labor has retained office goods and the quarry belonging to Petaquilla Gold mining as part of measures to ensure the payment of wages of workers in the mine.
Despite rumors of the stoppage of the extraction process due to lack of capital to continue operations, the mining company is not bankrupt, but owes its employees about $3.5 million. It is expected that by 29th to 31st of October, the company will pay the fees.
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