March 10, 2006

Investors wary of Guatemala gold mine opposition

By Mica Rosenberg

SIPACAPA, Guatemala (Reuters) - A Mayan protester lost his
life trying to stop Guatemala's first 21st century gold mine
from opening last year, and resistance may yet upset miners'
dreams of a new gold belt in the troubled nation.

Glamis Gold says its Marlin Mine, which opened in December
in the arid western Guatemalan highlands, will be the
Nevada-based company's largest and most profitable asset. The
mine is set to produce an average of 250,000 ounces of gold and
3.8 million ounces of silver annually for the next 10 years.

The company sees Marlin generating some $860 million worth
of gold in its lifetime. It would like the mine to be just the
beginning of its Guatemala operations, with further exploration
nearby and elsewhere in the country leading to more mines.

But Glamis, which also has mines in the United States,
Honduras and Mexico, faces opposition from local Mayan leaders,
environmental organizations and the Catholic Church.

Opponents compare the company to the gold-hungry Spanish
conquistadors who plundered Guatemala more than 500 years ago.
Resistance came to a head in January 2005 when the army and
police clashed with protesters trying to stop transport of a
giant milling cylinder to the mine site in San Marcos province.
One Mayan died and several were wounded.

The government says violent opposition has caused a drop in
applications for exploration licenses in Guatemala. The
country, believed to be gold rich, has attracted investors only
since a long civil war ended in 1996.

"Some companies that had been looking at the country
probably decided not to explore here," said Jorge Garcia,
vice-minister for mining. "This means Guatemala is losing
millions of dollars of investment every year."

After the latest violent protests, the government suspended
applications for new exploration and extraction licenses. It
also formed a commission to discuss reforms to mining laws.

But many highland villagers remain suspicious, even after
Glamis has invested millions of dollars on local health
clinics, schools and reforestation.


The Marlin site straddles 20 square km (7.7 square miles)
between the villages of Sipacapa and San Miguel Ixtahuacan.
Most of the mine is within San Miguel, where Glamis paid many
community members high prices for their land. Along the
well-groomed dirt road to the mine near the village new cement
block houses are being built with tin roofs and pick-ups out
front. Opposition has been less vehement in that town.

But also key to Glamis' expansion plans is Sipacapa, a
largely Mayan town of mud brick houses about a half-hour drive
from the Marlin site along a bumpy road.

According the Ministry of Energy and Mining, six of the 33
pending exploration licenses held by two subsidiaries of Glamis
fall within the boundaries of Sipacapa. But village residents
voted in a local referendum last June against all mining
expansions in their territory.

Last month, protesters blocked an access road to the mine
and threw rocks at a truck that tried to pass after the company
fenced off a commonly used transit route for security.

"In the mining industry the only way to survive is with
explorations running parallel to extractions," said Eduardo
Villacorta, Glamis' executive director for Central America. "We
have every intention to explore further in San Miguel and

Guatemala will charge Glamis 1 percent of the value of
metals extracted from its soil, plus taxes the company will
begin paying in 2008.

The mine opened an office of their Sierra Madre social
foundation in Sipacapa and are investing in local projects in
both towns. But some community leaders are not convinced by the
mine's public relations campaign.

"It is a manipulation," said Mario Tema, an indigenous
Mayan activist from Sipacapa. "They are taking advantage of the
good will and ignorance of the people with their supposed
development projects. The people want to defend their land and
their resources."

Experts say the future of mining in Guatemala will be
decided in large part by the success of Glamis.

"This is a project that the industry is really looking at
to see whether or not large scale industrial mining can be
viable in Guatemala," said Keith Slack, a mining expert at
Oxfam. "There is a lot riding on Glamis' ability to operate in
socially and environmentally responsible way."