It has been over three years since Pacific Rim closed down its operations in El Salvador and filed a notice of intent to seek arbitration against the Salvadoran Government for denial of mining permits.
Pacific Rim, a Canadian company that bills itself as “an environmentally and socially responsible exploration company,” reports that in the first half of fiscal 2012, their “cash and cash equivalents increased $1.4 million from $0.3 million at April 30, 2011 to $1.7 million at October 31, 2011. The company’s short-term investments increased from $0.8 million to $1.1 million over the same period, resulting in a $1.8 million total increase in assets.
The increase in assets does not indicate that they are all of a sudden profitable. According to a Pacific Rim’s press release announcing their quarterly report, the increase “reflects the cash proceeds of a private placement equity financing undertaken by the Company.” This means that Pacific Rim found new private investors to finance their operations. In fact, the press release states clearly that they have “no source of revenue, and will require additional cash to continue fund legal, exploration and administrative expenses.”
While Pacific Rim’s El Dorado project in San Isidro, Cabañas is their most advanced, the company recently acquired an option to earn 65% interest in the Hog Ranch gold property in Nevada and has begun field exploration. Pacific Rim also has the opportunity to acquire a 100% interest in the Remance property in Panama – an interest they secured in 2010. While they have begun “phase 1 drilling” at Hog Ranch, Pacific Rim reports that the Remance project is “in doubt” and they have no plans for exploring the property.
The biggest question mark for Pacific Rim remains their ICSID claim against El Salvador, which is potentially worth $100 million dollars and the rights to mine gold in Cabañas. In their press release, Pacific Rim says,
“Expenditures related to Pacific Rim’s CAFTA/ILES arbitration claim are expected to continue at present or modestly higher levels during the coming months, and are directly related to the level of arbitration activity. The Company has currently accumulated a liability of approximately $1.4 million related to the CAFTA/ILES arbitration action and is currently discussing vendor-specific alternative financing opportunities that will reduce this accounts payable position.”
The ICSID Tribunal will likely hand down a ruling any day on the last round of preliminary objections filed by El Salvador. If the Tribunal finds in favor of El Salvador, part or all of Pacific Rim’s claim could be dismissed. If the Tribunal finds for Pacific Rim, the case moves a little closer to a full hearing.
In anticipation of the decision, a group of labor, union, environmental and other civil society leaders will hold a rally outside the World Bank tomorrow (Thursday, December 15) protesting Pacific Rim’s claim. Those attending the rally will present a letter to World Bank and ICSID officials calling on them to respect El Salvador’s decision to prohibit mining in order to protect their local communities and water resources from environmental damage.
Though Pacific Rim continues to engage in minor exploration activities, their primary activity and asset is this lawsuit. A favorable outcome of the ICSID arbitration would be a windfall for Pacific Rim’s investors, possibly allowing them to recoup their $77 million investment and perhaps damages and lost profits.