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Cameco's Cigar Lake mine manager Rick Forbes walks down one of the mine shafts at the Cigar Lake mine site September 3, 2010. The mine has been dewatered since February 2010 after being flooded in 2006 and 2008. REUTERS/David Stobbe

© David Stobbe / Reuters/Reuters

Another Canadian miner has shied away from investing in Argentina, a country rich in mineral deposits but with a growing populist tang that is worrying the global mining industry.

In the latest pullback by a major resource company, Cameco Corp., the world's largest publicly traded uranium producer, said on Monday it ended a joint-venture exploration project with partner Calypso Uranium Corp. as it was about to enter its third year.

The project did not represent a major cash commitment to Cameco – some $3-million per year for three years to earn a majority stake – but it comes at a time when mining companies are nervous about committing new capital to Argentina, where the government of President Cristina Fernandez – elected to a second term by a landslide in October – is tweaking the economy in a bid to stem capital outflows and bolster the market.

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In April, Ms. Fernandez ordered the expropriation of partially state-owned energy company YPF SA from Spain's Repsol YPF, a move that drew the rebuke even of the World Bank president, who called it a mistake.

Miners are reassessing investments in the country's massive gold, copper and other resource deposits, spooked by populist measures such as the YPF expropriation, the forced repatriation of mining export revenue on local markets and requirements for companies to source equipment domestically.

Calypso, in a media release, stressed that Cameco ended the partnership due to a strategic shift, and not because of problems related directly to the company, its personnel or projects.

"Calypso has been advised the decision is in no way a reflection on Calypso … but is fundamentally a strategic shift in the regions and projects where Cameco will focus their exploration efforts," Calypso said. "Cameco will retain no interest in Energia Mineral [Calypso's wholly-owned Argentine subsidiary] or its properties."

Cameco spokesman Rob Gereghty said the move reflected the company's focus on exploration in the four key regions – Canada, the United States, Kazakhstan and Australia – where Cameco has some 70 exploration initiatives.

Saskatoon-based Cameco entered the agreement with Calypso in late 2010, giving it the right to acquire a 51-per-cent interest by investing $9-million over three years.

While not commenting directly on the Calypso project, John Gravelle, Canadian mining leader at PricewaterhouseCoopers LLP, said the YPF decision "is going to make people think twice about investing in Argentina.

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"Any time you see policies like that, especially in a part of the world that historically has flirted with populist measures like this, that always gives you a country risk," he said.

The moves could push Argentina onto a list of unfriendly jurisdictions for mining, like Venezuela and Bolivia, and drive investors away when the country is most in need of investment, experts say.

Gold and silver miner McEwen Mining Inc. cautioned investors late last month that Argentina's measures to control capital flight could threaten the company's cash flow, forcing it to re-think how to fund ambitious growth plans, including the development of a key project in Mexico.

A week earlier, Vancouver-based company Pan American Silver Corp. targeting massive growth in coming years, said it would stagger investments in Argentina until the investment climate cleared.

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