IAMGOLD (IAG) (IMG.to) bails on Ecuador

The basics: INV Metals (INV.to) today announced it was buying the Quimsacocha gold project from IAMGOLD (IAG) (IMG.to) with the price set at 150m shares of INV.to with a ticket price of 20c apiece (that's $30m to you, sir). The reality: A pissant lil junior with a 12 month price chart like this...

...gets to buy a deposit with 3.3m oz of indicated resource gold (with 2.1m oz of that grading a very decent 6.3 g/t) from a major for less than $10/oz (in fact more like $5/oz as those 150m shares are only worth 20c apiece in some corporate deal fantasy world). In the case of INV.to one can understand the risk, as an all-paper plus equity raise deal doesn't hold much risk, the company is led by an established name in Terry MacGibbon and enough people will go for this at this price....in short INV.to has little to lose. But the real story here is IMG throwing in the towel on Ecuador. When a big mining company runs out of patience with a country and firesales an asset like this, it speaks volumes of Ecuador as a jurisdiction. We wish good luck to INV.to as they're going to have a lot of community relations work to do at Quimsacocha (it's a real mess there, by all accounts) but we extract the true moral of this story from IMG's position. Ecuador is not a place for serious mining companies, period.

UPDATE: On checking the financials, we note that as at 1q12 IMG carried Quimsacocha at $27.5m in exploration expenses only ($26.6m YE2010). That explains the BS $30m in paper worth less than $17m last night....gotta paper over them there accounting books, hey guys? We also note that INV.v has rallied 4.5% to 16c this morning on this news, which according to this update's reasoning is unlikely to rally further.