(MENAFN- AFP) Canada's Kinross Gold Corp. said it was halting development at its massive Fruta del Norte project in Ecuador because it had failed to reach an agreement with Quito over taxes.
The decision move "will result in a charge of approximately $720 million (about $US 706 million) in the second quarter," the mining giant said.
"After more than two years of negotiations on exploitation and investment protection agreements for the project, the government of Ecuador and Kinross have been unable to agree on certain key economic and legal terms which balance the interests of all stakeholders," the company said in a statement.
"Therefore ... Kinross has concluded that it is not in the interests of the company and its shareholders to invest further in developing FDN."
Fruta Del Norte was discovered by Ecuadoran and Canadian geologists in 2006 under a patch of Amazon rainforest in south-eastern Ecuador. The site has estimated reserves of 6.7 million ounces of gold, and nine million ounces of silver.
A senior Ecuadoran official said Monday that Kinross had planned to invest more than $1 billion through 2015 in the project, but opposed Quito's insistence on a 70-percent tax on windfall profits.
"We have not surrendered to the proposals of the transnational corporations," said Pedro Merizalde, Ecuador's minister of non-renewable resources, as he announced Kinross ending its operation. "The state maintains its sovereignty over the management of natural resources."
Merizalde said that Kinross was leaving FDN "because the expected benefits were not enough to satisfy their shareholders."
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