Canadian gold company threatens Costa Rica with $1bn lawsuit

Calgary-based Infinito Gold Ltd. (TSX.V: IG) threatened the Costa Rican government with a $1 billion dollar lawsuit over its Las Crucitas gold mine concession last week, reports the Tico Times.

The company claims the government is in breach of the Canada-Costa Rica bilateral investment treaty. If the dispute cannot be settled amicably in six months, it will proceed with formal arbitration.

Infinito Gold sent a letter to the country's foreign trade minister demanding its subsidiary company, Industrias Infinito SA (IISA), be allowed to resume full operations, according to the Tico Times. The mine was closed after the approval of an amendment to the mining law which banned open-pit mining in the country.

IISA said at a press conference the government invited it to develop the project and it believed the investment was guaranteed.

The company has already invested $92 million and it claims to have lost $1 billion in potential profit.

Costa Rica's Supreme Courts have caused a legal vacuum regarding the project by writing two contradictory decisions about it.

Infinito says the constitutional branch of the Supreme Court (SALA IV) ruled in April 2010 that constitutional, legal, environmental and technical objections to the mine were without merit.

Meanwhile, the civil and administrative branch (SALA I) affirmed an annullment of the mining concession in Nov. 2011 and upheld a ban on open-pit mining.

Although, the company asked the SALA IV to enforce its decision, the Supreme Court has taken no action.

Costa Rica's President, Linda Chinchilla, said her administration has no power to act against the administrative court's judgement, according to Prensa Libre (in Spanish).

Infinito Gold Ltd. had projected it would extract 19.8 tonnes of gold during the mine's 10 year life.

Hat tip, MiningWatch Canada
Image courtesy IISA