TORONTO (miningweekly.com) – Toronto-listed Eco Oro Minerals on Monday said it had been served with a notice of legal proceedings in the Eighth Civil Circuit Court of the City of Bucaramanga, Colombia, filed by Sociedad Mina Los Diamantes and Crisanto Peña Gelvez, proceedings the company said it believed to be “spurious” and without merit.

Eco Oro said the claimants were seeking the annulment of an assignment and sale agreement entered into in 1994 by the claimants and the company, through which Eco Oro acquired mining permit 3452 from the claimants, who retained net profits royalties.

The permit, covering an area of 250 ha, was converted into integrated concession contract 3452, covering an area of 5 254 ha, by the Colombian government and registered in the National Mining Register in 2007.

The original area of the permit, however, covers a significant portion of the company's flagship Angostura deposit. The concession, which incorporated the permit and several other mineral tenures, was fully registered in the name of the company.

After reviewing the allegations with its legal advisers, Eco Oro said it believed the claims to be without merit and would vigorously contest them. The company would file its defence in due course and would initiate a claim for damages and for costs against the claimants.

The claimants allege that not all formalities were observed at the time the agreement was entered into and that the agreement should be annulled on that basis. The company is of the view that no deficiencies existed and had they existed would have been ratified by the conduct of the parties and the Colombian government, including by the Colombian Ministry of Mines, by perfecting the assignment of the permit in 1996 by administrative act, and that, in any event, the statute of limitations could be invoked to reject the claims.

Eco Oro also pointed out the original agreement required any dispute raised by the claimants to be settled by way of arbitration and not the courts.

The company did not expect the legal proceedings to have any impact on the company's current activities.

Angostura Development On Track

Eco Oro had been focused on its wholly owned, multimillion-ounce Angostura gold/silver deposit, located in north-eastern Colombia, for over 15 years, during which it had invested over $200-million in the project's development and in that of the surrounding communities.

Earlier in January, the company almost lost its project with the establishment of a new national park in the region in which the Angostura project is located.

Environment authorities declared plans to create a wilderness park and prohibit mining in a region rich in gold and silver where the Canada-based company hopes to produce precious metals.

Eco Oro said an initial assessment of the approved coordinates of the park in the north-west of Colombia would not impede development of the Angostura project. The company said the Corporación Autónoma Regional para la Defensa de la Meseta de Bucaramanga has now approved the coordinates of the Regional Park of Santurbán and the officially declared boundaries did not impede development of the Angostura project.

The company’s TSX-listed stock traded 5.38% lower at C$1.23 apiece on Monday morning.