Bolivian President Evo Morales has seized and nationalized the assets of Vancouver-based South American Silver Corp. (TSX:SAC), accusing the miner of causing a conflict that saw violence erupt among communities around the silver-indium-gallium project it was developing there.
Following a five-hour meeting held Tuesday, Morales and the local leaders of the Andean community of Malku Khota, where the Canadian miner was developing a silver-indium mine, decided against South American Silver.
The agreement comes only three days after Labour Minister, Daniel Santalla, committed to cancel and later reverse SAC’s mining concession in exchange for three of the five SAC-related professionals that had been kidnapped the previous week.
The Vancouver-based miner said early Wednesday that it has not received any formal notice from the Bolivian government about the cancellation.
"We strongly object to the government's stated course of actions and we will pursue all legal, constitutional and diplomatic options," said Greg Johnson, president and CEO of South American Silver.
The company described the Bolivian government's move as "surprising in light of the fact the company continues to receive the support from 43 out of 46 indigenous communities in the project area."
"South American Silver has worked closely with these local indigenous communities over the past several years providing significant direct employment on project related jobs, as well as jointly developing programs with the communities to facilitate job training, education, agricultural enhancement and water management for long-term sustainable development," it said.
The company has invested more than $50 million in the mining project since 2007, which was set to be one of the world's largest silver and indium mine.
The stock, which closed at $1.02 on Friday, has collapsed losing more than half of its value to close at $0.32 on Wednesday.
Though rich in mineral and energy resources, data from the Unicef shows that Bolivia is one of the poorest countries in Latin America and the weakest economy in all of South America.