Ecuador lifts mining ban on Kinross and Corriente

By Euan Rocha and Alonso Soto

TORONTO/QUITO (Reuters) - Ecuador lifted a mining ban on Kinross and Corriente that allows the Canadian miners to restart operations immediately, a government official told Reuters on Tuesday.

Vancouver-based Corriente, which explores for copper in Ecuador, said earlier it received a notice from the Ministry of Mines and Petroleum in Ecuador authorizing the restart of its field operations.

Ecuadorean President Rafael Correa banned all mining operations last April to halt land speculation and growing environmentalist protests in some mining provinces.

The approval of a new mining law in January led to the lifting of the freeze while it boosted governmental control over the industry that in recent years has attracted dozens of foreign companies exploring for precious metals.

The top official said both miners will have to update their environmental studies immediately and seek an authorization for the use of water in their concessions.

Corriente said it received its concession for general water use at its Mirador camp on February 26, and it plans to update its environmental permits and water use concessions for exploration drilling with the appropriate agencies.

The official, who asked not to be named because he was not allowed to speak publicly, said authorities have to visit the sites of IamGold, International Minerals and Dynasty before it decides whether to lift their bans.

He didn't say how long those official checks could take.

Corriente was banned more than two years ago by a previous administration to tame growing violence between pro- and anti-mining communities near its concessions in southern Ecuador.

"We are encouraged and pleased with the Ecuador government's continuing progress in working together to establish an environment in which large-scale mining can participate," Corriente Chief Executive Ken Shannon said in a statement.

Although Ecuador has no large-scale mining, some companies have found big deposits of copper, gold and silver in the OPEC member's southern region. The nation is scrambling for funding to cover a widening fiscal deficit, as the global economic crisis has crushed crude oil prices.

POTENTIAL SALE NEARS

In December, Corriente said it was in talks with a third party to sell itself. The company said the exclusive negotiation period would extend to March 31, and analysts believe a deal could be imminent.

"We believe negotiations to achieve this goal are well underway and should reach a successful conclusion within the next 2-3 weeks," Desjardins analyst John Hughes said in a note to clients.

Hughes raised his price target on Corriente to C$6 from C$4.50 on Friday, citing its value as a take-out play, rather than as a long-term resource development company.

Corriente shares, which have risen more than 35 percent year-to-date, rose 4 percent to C$5.46 in early trade on the Toronto Stock Exchange.

The company has not identified its suitor, but senior mining ministry officials in Ecuador told Reuters last year that China's Tongling nonferrous Metals, Xstrata and top copper producer Codelco were interested in Corriente's Panantza-San Carlos project.

Corriente's principal assets include an estimated 1.7 billion tonne copper deposit in Ecuador.