Argentine glaciers scupper Osisko’s Famatina project

An Argentine court ruled Wednesday in favour of suspending Famatina, a gold exploration project led by Canadian company Osisko (TSX:OSK), until a new ruling outlawing mining near glaciers is applied in the area.

The judge of the province of La Rioja decided in favour of a cautionary measure filed by the Famatina city hall, which temporarily suspends the agreement between the Quebec-based miner and the provincial government, signed in August last year.

According to local newspaper La Nación, Famatina mayor Ismael Bordagaray told a local radio the ruling was "historic," as he considers the verdict the town's first achievement in a legal battle that has most of its population at odds with the provincial government.

In the last five years, several mining companies have attempted to obtain permits to explore the Famatina mountain range, facing strong opposition from residents and local authorities who fear for its health and the environment impact of the project.

The governor of La Rioja, Beder Herrera, assumed office in 2007 after leading an impeachment effort against his predecessor amid allegations of fraud and corruption. The accusations were related to a deal with Barrick Gold to develop the Famatina site, which Barrick eventually abandoned, as Fox Business reported earlier this year:

A number of companies are pushing forward with large mining projects in Argentina, but many have faced stiff resistance. About eight provinces have banned open-pit mining and the use of chemicals common in the industry such as cyanide, effectively putting them off limits to large-scale mining projects.

However, a number of other provinces, including San Juan and Santa Cruz, are strongly in favour of the industry. Earlier in January, Rio Negro province joined La Rioja in lifting a ban on open-pit mining and the use of cyanide.

As part of the deal Osisko agreed to pay $500,000 and then invest $10 million over the next four years to conduct a feasibility study. Should it be built Osisko will receive a 70% stake in the Famatina mine.

But the agreement triggered massive protests at the end of last year and beginning of 2012, which forced Osisko to halt works in the area.

The company has repeatedly insisted that currently Famatina, located in northern Argentina, is an exploration project only and that there is no existing plan, design or intent for any mining operations to date.

The area hosts the famous mining district of La Mejicana where workings situated about 4,700 meters over sea level, including a tramway system, date back to the 19th century.

Osisko also operates the Canadian Malartic Gold Mine in Malartic, Quebec and is pursuing exploration on a number of properties, including the Hammond Reef Gold Project in Northern Ontario.

The Argentine’s National Glacier Act that has the Canadian firm in stand by, requires a thorough national inventory of the country’s remaining glaciers as well as “periglacial” areas where the ice has recently retreated but water remains below the surface.

Other companies operating in the country that will also be affected by the new law include Barrick, Xstrata Copper, Anglo American, NGEx Resources and McEwen Mining.

(Image: Famatina mountain, by Noelia Diaco. Courtesy of: Pescador Deportivo)