The Reminder is making its archives back to 2003 available on our website. Please note that, due to technical limitations, archive articles are presented without the usual formatting.
Jonathon Naylor Editor HudBay Minerals is selling its vast nickel project in Guatemala, but the company remains the target of a disturbing lawsuit relating to the development. The HBMS parent announced last week that it has entered into a definitive agreement to sell its interest in the Fenix project to Russia's Solway Group. Solway will pay US$140 million in cash at closing and US$30 million upon meeting certain conditions during the course of its development of the project. The deal is expected to close before October. "While we believe that Fenix is a robust project that warrants development, the project does not fit our strategy of focusing on VMS (volcanogenic massive sulfide) and porphyry deposits," said HudBay President and CEO David Garofalo in a news release. HudBay spokesperson John Vincic confirmed that following the sale, the company will remain the subject of a lawsuit alleging that mining security personnel, and others, gang-raped 11 women during evictions from the Fenix property more than four years ago. Rosa Elbira Coc Ich and 10 other women filed the lawsuit in March against HMI Nickel and its corporate owner, HudBay, seeking $55 million in compensation. They claim that on Jan. 17, 2007, they were gang-raped by mining security personnel, police and military as residents were purportedly kicked out of their homes in the community of Lote Ocho. That was before HudBay was involved in Guatemala. It wasn't until August 2008 that HudBay merged with junior miner Skye Resources, now known as HMI Nickel, so it could own the Fenix project in the eastern part of the country. Assailants The women assert that some of their assailants wore uniforms bearing the initials and logo of Compa-'a Guatemalteca de N'quel (CGN), HMI Nickel's Guatemalan subsidiary. HudBay called the allegations disturbing and has vowed to defend itself. "The alleged events predate HudBay Minerals' business interests and operations in Guatemala," Vincic said previously, "and we are not aware that they have ever been reported to Guatemala law enforcement or other authorities." Fenix is reportedly the site of a tense land dispute between local residents who illegally occupy the land and the companies that have sought to mine there. Based on government reports, Vincic said HudBay understands that "a legal eviction" was carried out by the Guatemalan government in the Lote Ocho area on the date in question. "Official government accounts indicate that substantial effort was made to keep the evictions non-violent," he said, "and in accordance with Guatemalan law, the evictions were carried out by unarmed police officers." The women's lawsuit seeks $11 million in general damages and $44 million in punitive damages. With HudBay now selling Fenix, Garofalo said the proceeds will "further strengthen" the company's financial standing as it develops the Lalor project near Snow Lake and the Constancia project in Peru. Pleased He said HudBay is "pleased to see the project in the hands of an experienced ferro-nickel operator, such as the Solway Group, which is committed to the development of Fenix." HudBay expects to record a non-cash charge related to its investment in Fenix of approximately $212.7 million in its consolidated financial results for the three months ended June 30. Speaking in Flin Flon in February, Garofalo termed the Fenix project "a bit of a strategic detour for HudBay," but one that is a "very robust project economically" that "deserves to be built." He said at the time that the company would seek out partners to help bring Fenix into production. Fenix has an anticipated mine life of 30 years. It contains an estimated 1.3 billion pounds of nickel, which at today's price is worth roughly $13 billion.
