March 27, 2017 / 6:05 PM / 10 months ago

UPDATE 1-Colombia municipality, home of AngloGold project, votes to ban mining

(Adds quote from mining industry group)

BOGOTA, March 27 (Reuters) - Voters in Colombia’s Tolima province have backed a proposal to ban mining projects in their municipality, a result that raises questions about the future of an AngloGold Ashanti gold exploration in the area.

South Africa’s AngloGold may not be permitted to extract gold at its flagship La Colosa mine - a $2 billion potential investment that could yield 28 million ounces of gold - after 98.8 percent voted against allowing mining in Sunday’s referendum.

AngloGold has been exploring at the site in central Colombia for more than a decade.

About 6,165 citizens backed the proposal, while 76 voted against it, according to the electoral authority.

Residents had previously expressed fears that extraction could damage ground water, but the company says the project will not affect the water supply.

“We regret that because of a badly laid-out debate about mining in Colombia, the country and the region are now at risk of not receiving the benefits of well-done and responsible mining,” AngloGold said in a statement on its website. “We will analyzed the consequences and the impact on the project.”

Commodity producers in Colombia have expressed worries about recent court decisions banning exploration on land already awarded in concessions and giving local authorities greater power to reject mining projects.

AngloGold has invested some $900 million in Colombia since 2006. La Colosa is its largest of three projects in the country.

Officials in Cajamarca were not immediately available for comment. AngloGold said it would comment further later on Monday.

“This generates uncertainty; all the mining investors are very attentive to what will happen and are worried by what is coming from here on out,” Santiago Angel, president of the country’s mining association, told Reuters.

Mining and Energy Minister German Arce told local radio Caracol that the authorities should respect the voters’ decision, but that it is not retroactive.

“You cannot put legal security at risk because these decisions cannot be made retroactive,” Arce said. (Reporting by Nelson Bocanegra, Julia Symmes Cobb and Luis Jaime Acosta; Editing by Dan Grebler)

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