Kinross’s Ecuadorean gamble fails

until it could formalize mining legislation.

As other investors ran from Ecuador, Kinross decided the bargain opportunity was too good to pass up. It agreed to pay $1.2-billion for Aurelian, despite the risk of operating in an unproven mining jurisdiction.

“We just thought it was the right time as a balance for risk and reward, and at a price we thought was attractive to Aurelian shareholders and defendable to Kinross shareholders,” former Kinross chief executive Tye Burt told the ernment. Chinese companies are not subject to the same market forces as Canadian ones, and it was not realistic for Kinross to agree to a windfall tax.

However, it almost did. In late 2011, the company reached a framework deal with the government that included the 70% windfall tax. It was abandoned after receiving a negative reaction from shareholders, and Mr. Burt was fired less than a year later.

New CEO Paul rollinson has stressed profitability over production growth, and on Tuesday analysts praised him for sticking with that strategy and refusing to develop Fruta del Norte with such a high tax burden.

“We continue to be impressed with the discipline and decisiveness being displayed by the Kinross management team,” TD Securities analyst Greg Barnes wrote in a note.

There are only a couple of Canadian miners still focused on Ecuador: Dynasty Metals & Mining Inc. and INV Metals Inc. The Kinross news is clearly negative for both of them, and INV said on Tuesday that it is re-evaluating its project.

In the short term, this move should have no effect on Kinross’s strategy. But it does raise questions about its long-term direction. With the uS$1.4-billion Fruta del Norte project off the books, the company has fewer development options.

Mr. Barnes and others speculated that Kinross is now more likely to greenlight the uS$2.7billion Tasiast expansion project. A pre-feasibility study on Tasiast did not demonstrate a strong return at current gold prices, but Kinross is working on a full feasibility study that could generate better results. The study should be completed next year, after which the board will make a decision.

Kinross shares in Toronto fell 6.4% to $6.03. Alberta’s energy industry is finding that cleaning up oilsands tailings is going to be harder than first thought. The province’s energy regulator has found that none of the oilsands companies affected by tailings reduction rules has met targets. The reasons range from problems with new and untested technologies to increases in production to poor planning for Alberta’s weather. Companies have been given more time to capture at least half of the fine particles the mines produce and turn them into surfaces that are solid enough to drive on. An Energy resources and Conservation Board spokesman says no action has been taken against companies because they are working hard to find solutions. Terry Abel says that will change if companies are still having the same problems two years from now when their next reports are due. Canada’s broadcast regulator Tuesday approved

s bid to acquire total ownership of the TVtropolis specialty television network from Shaw’s $59-million deal to buy rogers’ one-third interest in the channel was part of a series of transactions worth about $700-million the two companies announced in January. Shaw Media, the broadcast arm of the Calgary-based telecommunications company, acquired its two-thirds stake in TVtropolis in 2010 when it picked up Canwest’s television holdings for $2-billion in the wake of that company’s bankruptcy protection proceedings. The Canadian radiotelevision and Telecommunications Commission approved the acquisition despite concerns about the larger transaction raised by the Public Interest Advocacy Centre and other consumer groups.

and its KuwaitiBritish partners walked away from their £5.3-billion (uS$8.3billion) offer for the u.K. water utility as the bid deadline expired. The bidding group that included a Kuwait sovereign wealth fund declined to make an offer for Severn Trent under u.K. takeover rules at the 5 p.m. cut-off, Longriver Partners said Tuesday. The Canadian-led group had announced June 10 “it would not put forward a further proposal for the company in the absence of meaningful engagement” with the utility, Longriver said. No such engagement occurred so Longriver decided against increasing its pre-conditional offer, it said.