Aurelian confident as Ecuador plans mining reform

By Alonso Soto

QUITO (Reuters) - Aurelian Resources Inc (ARU.TO: Quote, Profile,Research) is confident it can develop alone its Fruta del Norte gold deposit, considered one of the world's largest, but that will depend on Ecuador's overhaul of its nascent industry, Chief Operating Officer George Bee said on Wednesday.

Ecuador, which so far lacks significant precious metal output, is planning stricter controls in the sector and will restart negotiations with exploration firms to boost its participation in deals.

Aurelian's deposit in southern Ecuador has raised the attention of mining big players Barrick Gold Corp (ABX.TO: Quote, Profile, Research) and Newmont Mining Corp (NEM.N: Quote, Profile, Research), industry analysts say, and has raised rumors of a takeover.

"We don't need the horsepower, financial resources and muscles of a major; we can do it ourselves" said Bee, speaking at the Reuters Latin America Investment Summit in Quito. "On the basis of this deposit we can build a new company."

Bee, who was a former director of projects for Barrick, said the deposit could start production before the 2012 target and would need an initial investment below $1 billion.

However, many investors are worried that the leftist government's internal debate over mining policy could hurt the plans of Aurelian and other Canadian companies.

President Rafael Correa, a leftist former economy minister, has said he backs exploiting large deposits as a much-needed source of revenue for the poor nation.

But his ally Alberto Acosta, the head of a powerful assembly rewriting the constitution, says mining could have a devastating effect on the country's pristine environment.