OceanaGold Corp OGC.TO (OGC) has lost a claim seeking some $284 million in compensation from El Salvador for failing to issue permits allowing it to dig a gold mine in the Central American country, according to an arbitration decision announced on Friday.
The World Bank's International Centre for Settlement of Investment Disputes (ICSID) found in favour of El Salvador, OceanaGold said in a press release, and the government was awarded $8 million to cover legal costs for the claim, first brought by Vancouver-based Pacific Rim Mining in 2009.
Pacific Rim was taken over in 2013 by OceanaGold, which continued to pursue the claim while at the same time trying to negotiate with the El Salvadoran government to win mining and environmental permits for its El Dorado project.
OceanaGold estimates El Dorado holds 1.5 million ounces of gold and 11.4 million ounces of silver resources.
The company said in a statement that it was disappointed with the tribunal's decision and would review the ruling before evaluating the next steps for its El Salvador unit.
Pacific Rim first applied for a mining concession in 2005. El Salvador, however, has blocked new mining permits since 2008 amid concerns about potential damage to a major river and water supplies from cyanide, which is used to extract gold and silver from ore.
A coalition of non-profit groups, backed by the charity Oxfam, have long campaigned against mining in impoverished El Salvador, questioning whether mines with short lives can really aid long term development.
OceanaGold, which has assets in the Philippines, New Zealand and the United States, expects to produce 385,000 to 425,000 ounces of gold and 19,000 to 21,000 tonnes of copper in 2016.
