Shares of Greystar Resources plunged on Monday after the company said it had been asked to redesign its key Angostura gold project to conform to new Colombian mining regulations.
Greystar stock tumbled 41.1% after a brief halt to its shares, while other Canadian gold miners active in northern Colombia also fell.
Ventana Gold slid 6.3% and smaller Galway Resources dropped 11.7%. Ventana and Galway are both working properties near Greystar’s Angostura project.
In a statement, Greystar said Colombia’s Environment Ministry had requested a fresh study that would see the project conform to new laws preventing development in Paramo regions, high altitude ecosystems in the Andes.
Angostura impinges upon a Paramo system, but the company said it was originally told the mine’s development would be not be affected by the new laws, as the project had been in the works for years.
The company said it has now been told it must confine the development to an elevation below 3,200 meters (10,500 feet) on the property.
“The request by [the Environment Ministry] for a redesign of the project and a new environmental impact assessment was not expected or anticipated by the company,” Greystar said.
Greystar said nearly all of the planned facilities and infrastructure at the site would be located above 3,200 meters, as would be half of the proposed open pit mine.
Greystar said will appeal the notification.
Angostura holds a resource of 11.5 million ounces, and Greystar had been hoping to file a feasibility study in the second half of the year.
The project lies next to Ventana’s La Bodega project, which has become a favorite of investors over the past year the company has released impressive drill results. Galway explores next to Ventana.
Analysts have suggested the combined area could hold as much as 30 million ounces of gold, and see a combination of the companies or assets at some point as likely.
Ventana, one of the hottest stocks on the Toronto Stock Exchange last year, ran into trouble late in November when the local owner of the mineral rights at the La Bodega project filed for arbitration in the hopes of reclaiming the property. That dispute has not yet been resolved.
Greystar stock was down C$2.67 at C$3.83 on the Toronto Stock Exchange. Ventana was down 61 Canadian cents at C$9.00, while Galway was down 12 Canadian cents at 91 Canadian cents on Monday morning. (Cameron French / Reuters)