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10/6/16

Dynacor Gold (DNG.to) and its Veta Dorada problem

Here's what's going down, according to IKN's on-the-spot sources. Back when they were putting their Veta Dorada project together, Dynacor Gold (DNG.to) managed to get the permits they needed with the regional government of Arequipa (known in Peru as GRA) in a rather dubious fast-track mode by cutting a lot of corners. This included managing to get their hands on the surface rights use permit in just four months instead of the five years it takes under normal circumstances, and that alone looks more than a little shady.

But the real problem they have now isn't just the dubious style of the permitting, it's the substance they hold because, since the Veta Dorada permits were awarded by the GRA there have been elections, new people have moved into running the GRA and the new guys have spotted serious irregularities. Here are the main two:

1) Its permit to operate was issued by the wrong people and using a regulation that had already been annulled and replaced by another. The surface use permit was granted by the GRA and it shouldn't have been. By the time Veta Dorada got that key permit it wasn't the GRA's job to grant it, it should have come from the relevant national authority (a body called "Superintendencia de Bienes Nacionales") which in effect makes the permit held by DNG.to null and void. It was also granted by the GRA to Veta Dorada (i.e. Dynacor) on land owned by The State (i.e. Peru) but The State hasn't received a penny for its land use, itself very strange.

2) The surface rights permit for the Veta Dorada plant allows DNG to explore or mine, but it doesn't allow it to build a processing plant. Unfortunately the latter is exactly what DNG did on the land even though the permit they got was specific, it simply didn't allow them to do that. They didn't care and the previous GRA administration seems to have turned a blind eye at the time. But the new guys haven't and therein lies the serious problem DNG faces today.

We hear that the new people in the GRA have now concluded their investigation into what went on during the permitting process in the previous GRA administration. What we expect to go down now is that very soon, perhaps as early as tomorrow Friday, the new Regional Government of Arequipa will revoke the authorization for the use of surface rights at the Veta Dorada plant. Once this happens, Peru's national-level Ministry of Energy and Mining will have no choice but to annul the plant's operating permit. And Veta Dorada closes for business. Don't say you weren't warned, folks.