Ecuador’s largest gold deposit is losing its developer. The owner of the Fruta del Norte concession, the Canadian company Kinross Gold, announced yesterday it is leaving Ecuador for good.

Kinross got the rights to the Fruta del Norte mine development when they spent $1.2 billion to take over another company in 2008. At the time, they called Fruta “one of the most exciting gold discoveries of the past 15 years.” But the company is unsatisfied with the deal the government seeks to strike for the extraction of the gold resources.

Kinross’s CEO told Reuters the company is at “an impasse” with Ecuador’s government, and its unlikely they’ll even recover any of the value of the project.

“I would hope, maybe, if we can have a collaborative transition process, maybe there’s something there. But they have told us they would not support a sale or provide an extension to the license,” CEO Paul Rollinson said.

Kinross owns the concession for Fruta del Norte until Aug. 1, and Ecuador isn’t budging from this deadline, not even to allow Kinross to seek partners, seek a buyer for the rights to Fruta del Norte, or extend the concession to continue negotiations over how to tax the mine profits.

Rollinson said in a statement they will take a $720 Million charge for this decision to leave. He told Bloomberg in a phone interview “we’ve been at the negotiating table for two years,” and that “sometimes the best deal is the one you don’t sign, and we believe that’s the case here.”

Ecuador is in the process of rewriting its mining law (more detail here)

One of the changes proposed for the law would postpone a company’s obligation to pay a high tax on profits until after the companys initial investment into the mining project is recovered. Even with the changes, Kinross was still dissatisfied with Ecuador’s ‘hardline’ approach on the proposed “70 percent, revenue-based windfall profits tax,” Rollinson told Bloomberg.

Meanwhile, Ecuadors minister of non-renewable resources has defended his hardline approach, saying the country wont cede to transnationals demands and will retain sovereignty over their resources. 

The national assembly is currently debating the mining law reforms. Yesterday, the reforms were up for their second reading. (Sp)