El Estor / Eximbal Mine
Here a page of resources relating to a Canadian mining company currently seeking to expoit a nickel depsoit in El Estor, Guatemala. I have worked with one of the NGOs seeking to assist local communities in participating in the development decision-making, and of course, seeking remedies for those wrongfully affected by the development.
The business in a nutshell.
Skye Resources Inc. optioned a concession bought by INCO may years ago, which lay fallow. Skye operates it through Compañía Guatemalteca de Niquel S.A.
The nickel deposit is potentially quite large, but it is in a form called nickel laterite, the saprolite portion of which which is difficult to process into something called nickel sulphide matte. Skye has also proposed to process the limonite through some “hyrdometallurgical” system. I believe, but do not know, that acid leaching is the basic technique, and the only other company I know doing it is an Australian one, whose processes are into massive cost over-runs. This is what Skye says about its new process:
Skye’s novel atmospheric leach process offers significant advantages over commercialized high pressure leach processes as a result of its ability to treat both the limonite and saprolite horizons of nickel laterite ore bodies and the relatively simple equipment used in the flow sheet, which is expected to lead to lower capital and maintenance costs and greater plant availability. While the Skye leaching process is novel, the downstream recovery processes are already well proven. The product of the atmospheric leaching process would be either mixed nickel/cobalt hydroxides (MHP) or mixed nickel/cobalt sulphides (MSP).
Skye needs about a billion dollars to bring it to production. They tried to attract a buyer last summer in the craze to purchase Canadian mining companies, and didn’t get a passing sniff. Their deal with INCO, which gives INCO the rights to a good part of whatever comes out of the ground, and options to take back the concession, is now property of CVRD anyway. Early this year they completed a sale of securities making about $90M, at about 10$ a share (clipped with warrants for 1/2 shares, exercisable at about 12$ a full share). So they have $90M in the bank on top of about $20M from an initial placement, if I remember correctly. I don’t know who bought the shares. INCO did not exercise its right to take about $10M of those shares.
Skye adopted a shareholder rights plan in December, otherwise known as a poison pill. I have not read the plan but these are generally to discourage take-overs of a company, or to provide current owners with “fair” treatment if there is an unsolicited bid to buy the company.
Skye is headed by Ian Austin, the former chief financial officer of Placer Dome Inc. On that item, note that there is 29M shares outstanding, about 3.5M owned by BHP and 3.5M by INCO. There are about 3M stock options outstanding (likely all to management) with an average strike price of about $4.50 per share, and 3.0M warrants. Management and Board own about 1.3M shares according to 2006 filings for the 2005 year. Those need updating.
This is a link to its listed company profile and trading history: Link. After a run-up mid-2006 it lost 50% of its value when no deal was closed. After another small run-up in January around the financing, it has once again dropped somewhat in price.
The Communities
Hard to know where to start with this: you really need to go back to at least 1965 when the mine was granted by the military government of the time to INCO, update to the 1980s when it was in production briefly during a ‘civil war’ which was later termed a genocide by the UN, to the peace accords of the 1990s which are largely a failure, to the current climate of repression. Some of this history is on the Chixoy Dam page of this website.
The land this mine is on in Izabal is contested as indigenous land - it should be noted that 50% of the population of Guatemala is indigenous, and part of the peace accord included redistribution of lands, including indigenous land claims, the vast majority of which have not been settled.
Last year in September, about 2000 indigenous folks asserted a land claim and engaged in some self-help, occupying the contested lands. The details of these claims can be found in the links below, but really, a delegation is needed to go and do a comprehensive report.
Some Resources (updated infrequently)
Skye’s website.
RightsAction has been gathering material. Link.
YouTube vids of some of the evictions from the land: Link.