Ascendant Copper Corporation has launched an impressive public relations campaign
in an effort to make light of very serious problems it is facing with its Junin
mining project. These are the facts:
Validity of the concessions. No matter how much the company invests in public
relations, the truth is that the legality of its mining concession in Ecuador
is still very much undecided. True, in 2003 the Constitutional Tribunal rejected-
by one vote- the injunction that sought to declare the concessions unconstitutional,
but the Tribunal ruled only on a technicality, and left the constitutional
question pending. (The Tribunal basically ruled that the government of Cotacachi
had taken too long to present the injunction.)
The Constitution of Ecuador makes it mandatory for the state to consult with
communities before it makes decisions that could impact the communities’ environment.
Since this constitutional mandate was not observed prior to the government
issuing the mining concessions, the concessions are unquestionably unconstitutional.
It is only a matter of time before they are so declared.
STOP WORK ORDER. On December 19th, the company incorrectly told the public
that the government had not ordered it to stop its activities within
the Junin project concessions. Yet, the document from the Ministry of Energy
and Mines dated December 8 th 2006 plainly asked the company to stop itsactivities,
until its Environmental Impact Study was approved, a process that could take
many months or a year to complete.
It’s important to highlight that the Ministry did not limit the stop-work
order to just mining activities. This drastic step was taken principally because
of the environment of violence and terror generated when Ascendant Cooper’s
contractor, Falericorp–financed by Ascendant Copper Corporation–hired armed
personnel to force their way, with guns and tear gas, into Ascendant’s
concessions. They were unsuccessful. Ascendant has falsely claimed Falericorp
is an agricultural company; in reality it sells communication equipment. The
use of armed thugs and violence turned the press and public against the company.
It also shattered virtually all the support the company had within the government,
Intag and the rest of the country.
LOCAL OPPOSITION. One of the most troubling aspects about Ascendant’s
distortion of information is how it has kept from Canadian regulators and its
investors the facts about the nature of the local opposition it faces. Ascendant
has continually claimed that it is just a few radical people—“ecoterrorists” in
their parlance–and mainly one local organization, DECOIN, that oppose its
project. Yet every single Township government in the Intag region, both Cotacachi
County and the Provincial governments, not to mention most communities within
and adjacent to the company’s mining concessions, have publicly expressed
their opposition to the mining project. This makes local government opposition
unanimous, something seldom achieved in Ecuador’s history of resistance
to mining. In addition, approximately 90% of the NGOs working in Intag and
Cotacachi County (where the Junin project is located) also have expressed their
VIOLENCE. One of the central themes of the company’s misinformation
campaign is to lay blame on anti-mining forces for the violence in Intag. It
was the company, however, through its contractor Falericorp, that in November
used tear gas against defenseless local people. It was also Ascendant that
hired an army helicopter and financed the hiring of the armed military
and ex-military personnel who tried unsuccessfully to storm the company’s
concessions on December 2 nd of this year. And it was pro-mining forces, allegedly
led by several Ascendant employees, who, on the 6 th of December 2006, threw
stones, Molotov cocktails and burning tires and fired shots at a anti-mining
group. These were directed at the Mayor of Cotacachi and the Governor of the
province of Imbabura, who, together with journalists and a large anti-mining
group, were trying to reach the community of Junin.
This violence came on top of the October 17 th pre-dawn raid to the home
of a well-known anti-mining activist by nineteen heavily armed police. The
police came bearing arrest and search warrants as a result of completely trumped-up
robbery charges made by someone supposedly working for Ascendant. They came
in unmarked cars, some of which were identified as belonging to the company.
As a result of actions such as the above, national and international human
rights bodies, including the UN High Commissioner for Human Rights, Amnesty
International and Global Witness, are looking into the violence and human rights
violations affecting individuals and organizations opposed to Ascendant’s
project in Intag.
Land purchases. Many of the properties Ascendant purchased around the Junin
site are illegal, either because the company bought land that is supposed to
be used exclusively for agricultural purposes, they lie within protected forests
(Chontal), or because government entities illegally adjudicated state land
within mining concessions. Already several land titles have been declared invalid
in this area and the authorities are currently looking further into corruption
issues. Although DECOIN has been unable to confirm the persistent reports of
kickbacks involving land deals, it is a very well known fact that Ascendant
has paid up to 30 times the real worth of properties, and purchased some outside
the mining concessions.
the Environmental Impact Study. Ascendant’s publicity news releases
have repeatedly stated that the EIS was finished, had been presented to the
government, and that approval was expected in a matter of weeks (in the company’s
2005 annual report it stated that it had completed the EIS, and that it would
be submitted in Ap ril of 2005 [it is interesting, to say the least, that the
Terms of Reference for the EIS was approved in June 2006!!]) Yet, in the June
2006 Financial Statement the company stated that the EIS had not yet been submitted.
On December 8, 2006, the Ministry of Energy and Mines informed Ascendant’s
Ecuador General Manager that their Junin Environmental Impact Study was so
flawed that they were unable even to process it. They pointed out, among other
things, that the company had not socialized its content with communities most
at risk. The company, they stated, will have to comply with (tough newly created)
regulations controlling the consultation process with the communities.
If done properly, an EIS can take months and hundreds of thousands of dollars
to complete. With the change in government, there will be new officials in
the Ministry of Energy and Mines who will be more stringent in seeking complete
compliance. No more friends in High Places for the company. It is also certain
that the new progressive government will annul many of the country’s
mining concessions, granted after Ecuador’s 1998 Constitution came into
effect, which requires communities to be previously consulted.
ECOLOGICAL, SOCIAL, ARCHEOLOGICAL AND OTHER FACTORS. The Junin mining project
is adjacent to two legally protected areas: the Chontal Bosque Protector, and
the Cotacachi-Cayapas Wilderness Area. In spite of what Ascendant has been
saying, most of the concessions encompass PRIMARY cloud forests, which are
part of the Tropical Andes Biological Hotspot, the hottest of all Hotspots.
The threatened forests protect dozens of pristine streams and rivers,
are home to dozens of endangered mammal, amphibian, bird and plant species.
These include Jaguars, Ocelots, Spectacled Bears, Pumas, the critically endangered
Brown-headed Spider Monkey, and Plate-billed Mountain Toucan, to mention only
some of the most prominent. The threat to the spider monkey, which requires
mature forests, constitutes a major obstacle to the project, as was highlighted
in the scientific work at the nearby Los Cedros Biologial Reserve in 2006.
After reviewing all the information regarding the project’s environmental
impacts, our organization concluded that there is no other mining project
in the world that threatens so many endangered species.
ECOLOGICAL ORDINANCE. In April of 2000, Cotacachi County, where the Ascendant’s
concessions are located, created a strict environmental ordinance that prohibits
activities that threaten the County’s native forests, or to contaminate
its water resources with heavy metals, such as Ascendant’s project threaten
Social Impacts. The earlier Japanese Environmental Impact Study carried out
for the Junin mining project, and based on four years of drilling, and a small
portion of the total of the 2.3 million tons of copper they
inferred they discovered, called for the relocation of four communities to
make room for the mine (this is nearly 4X less than Ascendant’s estimate)
All of these communities oppose the mining project, and they have stated they
will not relocate peacefully.
ARCHEOLOGY. Parts of the mining area are rich in pre-Incan archeological
sites–including earthen pyramids and thousands of tombs. This was confirmed
in Ascendant’s own Environmental Impact Study. What possibly Ascendant
has kept from you is that Ecuadorian law prohibits mining in archeological
FUTURE CHANGES TO THE MINING LAW. For mining companies doing business overseas,
modifications to mining legislation can be a company’s worse nightmare.
The recent violence surrounding Canadian mining companies in Ecuador–including
the violence of armed groups in Junin financed by Ascendant–not only shocked
the nation, but led government officials to propose major changes to Ecuador’s
mining legislation. The press has pointed out the serious flaws in the law
that makes mining highly injurious to Ecuador’s national interests. A
complete overhaul of the law is expected, which will do away with many of the
pro-industry incentives that have made mining so attractive for the industry.
FINANCIAL ISSUES. If you still feel this is a viable project and company,
consider the following:
Ascendant has raised approximately 20 million dollars since its creation 30
months ago, with little to show by way of positive accomplishment.
The company’s March 31 st 2006 first quarter report stated that
“The Company currently has approximately US $5 million earmarked this
year for a 22 hole, 15,000 meter, drilling program for Junin once the EIS process
is complete…..” (*see above for EIS irregularities)
The report further noted that
The work program will concentrate on the exploration and development
of the Junin property . Maintenance fees will be paid
and the Chaucha concession will be maintained in good order (p.
10; Outlook Section- bold mine)
The Company’s short-term objective is to gain access to the Junin
property for commencement of exploration, through exploration to upgrade
the existing inferred resource and demonstrate continuity of grade, to complete
a pre-feasibility study to determine if the project is economically viable
and, if warranted, prepare further work programs leading to completion of
a bankable feasibility study on the project
( this same paragraph was repeated identically in the June 30
th 2006, and earlier Financial (and Unaudited) Reports)
(Taken from: Management’s Discussion and Analysis For
the Three Months Ended March 31, 2006; and for June 2006)
Although 2006 has come and gone,
- The Environmental Impact Study has not been approved (nor has it any real
prospect for approval).
- Ascendant has not been able to gain access to the Junin property (not
even at gunpoint)
- There has been no exploration at the Junin property
- No pre-feasibility study has been carried out.
An investor might well question where the 5 million, or the other millions,
Perhaps it went here. Ascendant Copper has carried out several questionable
deals with other directors, either hiring them or their companies directly
for management support or the like, or buying mining concessions outright on
Ascendant’s home turf from companies owned by common directors. For example,
on May 10th of 2006, Ascendant purchased the Magdalena mining property from
Ascension Gold, a company partly owned by Paul Grist, for $ 25,000, and ceded
a 2% net smelter royalty fee for Ascension. Grist was one of Ascendant’s
directors at the time of the transaction. Had Ascendant itself done the concession
paperwork, it would have cost a fraction of what was paid, and it would not
have had to give up any royalty rights. In most parts of the world, these kind
of deals would likely qualify as conflict of interest. Perhaps it helps that
Ascendant’s quarterly financial statements are unaudited.
Investors should also take note of the guesswork involved in Junin’s
inferred mineral deposit. Under Canadian law, a ‘Qualified Person’ is
obliged to undertake a site visit when preparing the technical report to
determine a mining property’s inferred mineral deposit. In the case
of the Junin property, the visit was to determine the amount of the inferred copper
and molybdenum deposit. However, in a letter dated July 12, 2006 Ascendant’s
CEO admitted to the Canadian Ambassador that the company had, to date, been
unable to access its “legally-owned concessions” in the Intag
region (the Junin property) Yet the supposed site visit, an obligatory part
of the appraisal of the mineral deposit, allegedly took place more than a
year prior to the letter being written.
Earlier this year, based on the above information, the Canadian Environmental
Law Association presented a claim to the Ontario Securities Commission. The
results of the ongoing investigation could seriously undermine the inferred
amount of minerals at the Junin property.
Risky Business? In June of 2006, RAB CAPITAL (UK) sold all of its 2.3 million
Ascendant shares (amounting to 11.8% of Ascendant’s shares) The question
begs itself: which one of the multitude of risk factors finally forced the
prestigious investment firm to rid itself of Ascendant’s investments.
The above is only a sampling of the abundant examples of troubling financial
information coming out of Ascendant. We hope it’s enough to motivate
you to ask Ascendant Copper a few tough questions.
Prepared by DECOIN, Defensa y Conservación Ecológica de Intag,
January 1, 2007