This story is a good example of why, apart from one specific exception, it's impossible to reco mining stocks in Ecuador (we've been through this quite a lot in recent issues of The IKN Weekly). As good as a company like (as just one example) Salazar (SRL.v) might be, what's the point in investing there if the government knows absolutely zero zip squat NADA about the mining industry and what makes it tick?
Here's the beginning of the DJNW report, click through for the rest.
QUITO (Dow Jones)--Promising geological conditions and some recent discoveries are spurring hopes that Ecuador could become an important center for mining.
Investors may not flock to the Andean nation, however, if the government moves ahead with plans to make mining companies sign service contracts, industry officials said.
A high-level government official told Dow Jones Newswires the administration of President Rafael Correa hopes to make private-sector companies sign service contracts instead of allowing ownership of resources, much as it has done in the hydrocarbons sector.
"We (in the government) prefer the service contracts, as we are already using it in the oil sector. Most likely we will be working along those lines (in the mining sector,) although everything depends on the circumstances," Minister of Nonrenewable Natural Resources Germanico Pinto said in an interview this week.
He said the first mine to go into production could be around 2011 or 2012, without naming which company could be the first to go ahead.
The government has said Ecuador has a mineral potential of yada yada continues here