Orla Mining to Pursue Arbitration Against Panama

Orla Mining to Pursue Arbitration Against Panama

April 15, 2024 : Canadian mining company Orla Mining Ltd. (TSX: OLA) (NYSE: ORLA) has initiated arbitration proceedings against the Panamanian government. This action stems from rejecting permit extensions for the company’s Cerro Quema gold project in western Panama.

The arbitration process was announced on April 10, 2024, following unsuccessful attempts by Orla Mining to reach a “constructive resolution” with the Panamanian government. The company expressed disappointment with the need for arbitration but emphasized its commitment to securing fair treatment for its shareholders.

At the heart of the dispute lies the Cerro Quema gold project, which Orla Mining acquired in 2018. The company has invested significant resources in exploration, development, and obtaining the necessary permits for mine construction. The project encompasses three mining concessions, and Orla Mining requested extensions for the permits associated with each concession.

However, in December 2023, Panama’s Ministry of Trade and Industry rejected Orla Mining’s request for permit extensions. This decision effectively stalled the development of the Cerro Quema project. Orla Mining believes that this rejection constitutes a breach of its rights under the Canada-Panama Free Trade Agreement (FTA).

The company intends to utilize the arbitration mechanism outlined within the FTA to resolve the dispute. This process will involve creating an independent tribunal tasked with evaluating the merits of Orla Mining’s claim. Should the tribunal rule in Orla Mining’s favor, it could order Panama to compensate the company for any damages incurred due to the permit rejections.

The potential consequences of this arbitration process for Panama remain unclear. However, a negative ruling against the government could result in significant financial repercussions and discourage future foreign investment in Panama’s mining sector.

While Orla Mining seeks compensation for its losses, the arbitration process’s ultimate goal is likely to secure the necessary permits and proceed with the development of the Cerro Quema project. The project is estimated to generate significant job opportunities and contribute to Panama’s economy.

Looking ahead, Orla Mining and the Panamanian government will closely monitor the progress of the arbitration proceedings and the tribunal’s final decision. The outcome of this dispute can potentially influence future foreign investment opportunities within Panama’s mining sector.