Ecuador
Mining Catalog
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Ecuador Mining Catalog
Message from the Minister of Mining The Ecuadorian mining sector is undergoing a moment of strengthening, focusing on a prominent future. This is fundamentally due to the firm political decision of the National Government to transform mining, not only into a source of revenues for the national treasury, but also into a dynamic sector that significantly enhances local and national economies, generating a common benefit for citizens. The development of mining industrial in Ecuador is one of the main priorities of our strategic sectors. Evidence of this was the decision taken last year to create a specific Ministry for the mining sector. This positive change guarantees an agile institutional structure that is at the service of entrepreneurs and citizens. In this context, opportunities for progress and investment in Ecuador are based on three essential pillars that position it as a new hub for development of the mining industry in the region: 1) the great mining potential to be explored, 2) a strong commitment to the sector and the political stability of the National Government and, 3) the competitive advantages offered to investments in the sector. All these have generated a climate of confidence for national and foreign investment. This Mining Cataloge becomes a very useful informative tool for the investor. The relevance of the geological potential Ecuador possesses is reflected both in the projects that are under development, as well as in those areas that represent opportunities to reactivate exploration in the country. Its also outlines the comparative advantages that we have to attract foreign investment, basically related to operating costs and the access to indispensable resources for the development of mining projects. We are striving to stand out in the region as a new destination for mining investment and, in this sense, our commitment to investors is further bolstered by a strategy for public-private partnerships that has emerged through legal and tax reforms to promote the injection of the new capital for the development of the industry. To this we must add the financial stability provided by a dollarized monetary system. Without further preamble, I invite you to discover the geologic potential of Ecuador, a new mining destination in Latin America.
Javier Cรณrdova Unda Minister of Mining 01
Ecuador Mining Catalog
Content
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I.
The importance of mining in Ecuador
II.
Advantages of mining in Ecuador
III.
Project status
IV.
Investing in Ecuador
Ecuador Mining Catalog
I. The importance of mining in Ecuador Mining is recognized as a key strategic sector for the country
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Ecuador Mining Catalog
The foundations of a new pillar of the economy The objective of the Ecuadorian government is to transform the mining sector into a pillar of the economy in the next 5-10 years. To achieve this, the government is making meaningful positive changes in the sector: it has approved numerous fiscal and legal reforms to improve the country's competitiveness; also, to reinforce the government’s commitment to the mining sector, the Ministry of Mining has been elevated (previously a sub-ministry), giving it greater voice to the needs of the mining sector in the government and greater capacity to support development of the mining industry.
The new Ministry of Mining In 2015, the Ministry of Mining was created in order to incentivize and accelerate the development of the sector. This change is already resulting in increased momentum and significant advancements in key mining projects and administrative processes.
As an official "strategic sector", the Ministry of Mining benefits from the support of the highly influential Coordinating Ministry of Strategic Sectors (MICSE). The MICSE directs and ensures cooperation of the other ministries that oversee key issues of the mining sector, such as water, fuel, electricity, and environmental permitting. With MICSE support, the Ministry can greatly simplify and streamline companies' interactions with the government and facilitate the resolution of any concerns. 04
Ecuador Mining Catalog
The ministry manages additional mining-related institutions
National Mining Company of Ecuador Explores and develops mining projects through partnerships and ventures with private mining companies, to contribute to the economic development and the advancement of mining capability in Ecuador.
Agency for Mining Regulation and Control Issues, administers, and extends mining rights and concessions to ensure that this activity is carried out in a legally, technically, and socially responsible manner.
National Institute of Geological, Mining and Metallurgical Research Performs geological studies and searches for new mineral deposits, with a technical and scientific perspective. 05
Ecuador Mining Catalog
II. Advantages of mining in Ecuador Ecuador's mining sector offers valuable advantages for investors interested in Latin America
Ecuador Mining Catalog
High quality mineral deposits Ecuador Geological Map
Scan QR High resolution maps:
http://visor.geoinvestigacion.gob.ec/areas_mineras/
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Ecuador Mining Catalog
Exceptional geology Ecuador is a country with great exploration opportunities Only about 5- 10% of the land area has been explored, resulting in significant potential for major new discoveries of gold, copper and other metals in the mineral-rich Andes mountains.
Potential for low stripping ratios Because its mineral wealth is less exploited to date, Ecuador features many deposits with low stripping ratios compared to recent projects in neighboring countries.
Diversity of minerals Ecuador has deposits of numerous minerals, including Au, Cu, Ag, Mo, Th, Ba, U, Ce, W, Nb, Sn and Pb.
Potential for high grades Current projects demonstrate the potential to discover higher grades than have be found in other recent projects in Latin America.
Current copper grades 1.3%
Ecuador has some of the highest grade copper projects in the region
Ecuador Chile Peru
0.6% 0.6% 0.6% 0.5% 0.5% 0.5%
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Caserones
Antucoya
0.4% 0.4% 0.3% Constancia
Quadra
Toromocho
Blanca
Galeno
Panantza
Mirador
Las Bambas
Mina Justa
0.4%
Ecuador Mining Catalog
World class infrastructure
The Ecuadorian government has invested US$30.4 billion in strategic sectors in the last 8 years. This investment has provided the country with world class infrastructure.
Government investment in strategic sectors (USD billions) 0.4 e $3 v i t ula Cum
$1,1 $1.1
$2.3 $2,3
$2.8 $2,8
$2,8 $2.8
$3.5 $3,5
$4.3 $4,3
2007
2008
2009
2010
2011
2012
$6.4 $6,4
$7.1 $7,1
2013
2014
These infrastructure investments provide tangible benefits to the mining sector, as for many projects they can reduce capital costs, operating costs, and development times to improve project economics.
Energy
Water
8,300 MW USD 6.6 billion investment 3.5 GW of new capacity %
Highways USD 8.2 billion investment
USD 1.5 billion investment
Clean Energy
Ports
Airports
USD 20 million investment
USD 350 million investment
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Ecuador Mining Catalog
Infrastructure Energy and water
Ecuador has ten hydroelectric projects currently under construction 8,300 MW of installed capacity is expected by 2016 With the additional capacity, Ecuador’s power generation is anticipated to exceed domestic demand
Coca Codo Sinclair USD 2,581MM
Manduríacu
Toachi Pilatón
USD 227 MM
USD 480 MM
Mazar Dudas USD 83 MM
Minas San Francisco
Quijos
USD 589 MM
USD 156 MM Sopladora USD 963 MM
Delsitanisagua USD 335 MM
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Ecuador Mining Catalog
Infrastructure
Highways, ports, airports Over 8.2 billion USD was invested between 2007 and 2015 in roads alone, improving 89% of roads in throughout the country.
10,000 Km of new improved high quality highways.
5 main ports evenly distributed along the coast.
15 airports being built/updated throughout the country.
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Ecuador Mining Catalog
Competitive operating costs
Competitive advantages in several key mining costs, complemented by exceptional geology, provide real operational advantages Ecuador features several prominent gold and copper projects that are projected to be in the first quartile of global cost curves, demonstrating the impact of Ecuador's advantages versus its regional peers.
Global Operating Cost Curve, 2020 – Gold Long term price $1.350/oz
USD/oz
1,500 Loma Larga 165 Fruta del Norte 293
1,000
Chile: Latest projects Peru: Latest projects Ecuador projects Others
500 0 0
500
1,000
1,500
• Gold and copper project expected to be 1st Quartile
• Operating costs much
Global Operating Cost Curve, 2020 – Copper
USD ¢/lb
400
Mirador Llurimagua Panantza
300 200
lower than regional peers
Long term price ¢350/lb
80 84 89
100 0 0
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10,000
20,000
Note: This analysis only includes operational cost of mine . Source: Wood Mackenzie
30,000
40,000
• Competitive advantage in 40% of operating costs: o Work force o Electricity o Fuel o Freight
Ecuador Mining Catalog
Fiscal regime: Incentives and reforms
The government is taking concrete steps to make the fiscal regime more competitive
Fiscal stability contracts
Fiscal stability contracts applicable to investments of all sizes (no minimum investment guidelines) Protects against future changes to income tax, VAT, and currency exportation tax
Accelerated depreciation
Investor’s choice to accept accelerated depreciation Investors choosing accelerated depreciation can select a period of 5-10 years
VAT refunds starting in 2018
VAT will be refundable for mineral exports Significant positive impact on IRR of projects
Exemptions from currency exportation tax
Equipment specific to the mining sector is now exempt from the currency exportation tax
Capital gains tax restricted
Places limits on the transactions that can be taxed, to ensure that only substantial transfers of ownership trigger the tax
Foreign investment allowed in small mining Other taxes
Foreign companies are now permitted to invest in small Ecuadorian mines
New rules have rendered certain additional taxes inapplicable (sovereign adjustment and extraordinary gains tax) until the company has recovered its investment 13
Ecuador Mining Catalog
III. Projects status
Ecuador Mining Catalog
18 major discoveries
Under evaluation and development private projects
Of these 18 projects, the first five are sufficiently advanced to achieve "strategic project" status, which qualifies them for additional government emphasis and support.
Legend
Strategic
The other projects are anticipated to move forward in the medium term.
14 13
6
18
Private
17
9
4
3
Enami
7 15 16
8 5 1 2 11
12 10
Strategic
Private
Enami
Project
Company
Metal
1
Mirador
Tongling
Copper
2
Fruta del Norte
Lundin Gold
Gold
3
RĂo Blanco
Junefield
Gold
4
Loma Larga
INV Metals
Gold
5
San Carlos Panantza
Tongling
Copper
6
Cascabel
SolGold, Cornerstone
Gold / Copper
7
Curipamba
Salazar Resources
Gold / Silver
8
Warintza
Lowell Copper
Gold
9
Chaucha
Southern Copper
Copper
10
Condor Gold
Ecuador Gold and Copper
Gold
11
RĂo Zarza
Eco Metals
Gold / Copper
12
Cangrejos
Odin Mining
Gold / Copper
13
Llurimagua
Enami y Codelco
Copper/ Molybdenum
14
Tola Norte
Enami
Iron / Titanium
15
Telimbela
Enami
16
El Torneado
Enami
17
Pacto
Enami
Gold
18
La Bonita
Enami
Gold / Copper
Copper/ Molybdenum Copper/ Molybdenum
Note: Enami is the National Mining Company Source: Ministry of Mining, Wood Mackenzie
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Ecuador Mining Catalog
Five strategic projects
Selected advancements in strategic projects
Loma Larga 4
3 RĂo Blanco 5 Panantza
Mirador 1
Fruta del Norte 2
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Cu
Au
Ag
Au
Ag
Ecuador Mining Catalog
Mirador
Mine construction began in 2015. First production expected in 2018
COPPER
Measured and indicated resources
GOLD
SILVER
3.2 m oz
2.96 million tons
26.08 million ounces
US$ 1.500 millions
Estimated investment
Mine construction
Status
Fruta del Norte One of the world's premier undeveloped gold deposits Key exploitation contract terms already negotiated as part of a precontractual agreement signed in January 2016
GOLD
Probable reserves Estimated investment Status
4.82 million ounces
SILVER
6.34 million ounces US$ 960 million
Operational Phase / contract negotiation
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Ecuador Mining Catalog
RĂo Blanco
Au
Ag
Au
Ag
Cu
Cu
Mo
Ag
Mine construction to begin in 2016 GOLD
Reserve
SILVER
605 k oz
4.3 m oz US$ 88.8 million
Estimated investment
Exploitation-Mine construction
Status
Loma Larga Pre-feasibility study completed in 2015 GOLD
Probable reserve
1.135 million ounces
Estimated investment Status
SILVER
5.68 million ounces
Advanced exploration
Projected annual copper production of over 400 million pounds COPPER
Estimated investment Status
18
21.10 tons
US$ 244 million
San Carlos - Panantza
Resources
COPPER
6.6 million tons US$ 3 billion Advanced exploration
Opportunities for exploration and participation in new projects
Ecuador Mining Catalog
IV. Investing in Ecuador
Ecuador Mining Catalog
How to invest: 2 ways 1. Invest in existing state-owned projects Partnering with ENAMI
The National Mining Company (ENAMI) is seeking partners to develop and operate its portfolio of projects. These projects represent the most advanced new exploration opportunities in terms of data availability. Coldelco is partnering with ENAMI for the exploration, evaluation, development and operation of the Llurimagua copper project, and similar partnerships with private companies are possible for the five other projects under a variety of potential structures. Partnering with ENAMI provides a streamlined entry into the Ecuadorian market, and provides private sector partners with benefits and support normally reserved for state-owned entities. The process of associating with ENAMI is flexible, with the basic process defined as follows:
Start of process
Confidentiality agreement
Partnership process Multiple structures can be pursued. Alternatives may be considered. The most common structures are: - Strategic Alliance: Flexible, ENAMI EP share usually 10 - 50 % - Private/Public Company: ENAMI EP stake 51 % - Joint Venture
Company qualification requirements include: Demonstrated knowledge, capacity, and experience in the mining sector Solvency 20
Negotiation: Proposal Counterproposal Negotiations
Approval by ENAMI Board of Directors
Authorization of the General Manager to sign the partnership agreement
Imbabura province
Cu
Ecuador Mining Catalog
Llurimagua
Partnership with Codelco
Mo
Resource
318 million metric tons
Area
4,839 ha
Phase
Advanced exploration
Tola Norte
Esmeraldas province
Fe
Ti
Resource
1035 million metric tons
Area
4,648 ha
Phase
Advanced exploration
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Ecuador Mining Catalog
Telimbela
BolĂvar province
Cu
Mo
Potential
Drilling of 4,000 m. over the anomaly of Ashcoaca. Several sections in the drilling TEL-06 of up to 20 m with 0.9% Cu, several sections with 27 m with 1.1% Cu
Area
4,033 ha
Phase
Advanced exploration
El Torneado BolĂvar province
Cu
22
Mo
Potential
0.5% Cu, 69% Zn in 2150 Ha (Concesion El Cristal, Gualazay, Gero, Greenfield, Chiledona)
Area
17,878 ha
Phase
Advanced exploration
Ecuador Mining Catalog
Pacto
Pichincha province
Au
Potential
350,000 ounces Au El Viudo Sector 50,000 ounces Au La Victoria Sector
Area
4,645 ha
Phase
Advanced exploration
La Bonita
Sucumbios province
Au
Cu
Potential
Geochemistry of fluvial sediments, soils and rock, exhibit anomalies of interest in the Rosa Florida Concession. There is evidence of free gold in the pan.
Area
13,590 ha
Phase
Initial exploration
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Ecuador Mining Catalog
How to invest: 2 ways 2. Obtain a new mining concession Companies may request multiple mining concessions of up to 5,000 hectares each in available areas, according to the new process established in February 2016, which is summarized on the following page. The Ministry of Mining may initiate its own auctions of additional concessions with known potential from time to time, depending on market conditions. These auctions will be publicized internationally prior to launch. - 2A. Process to obtain a new mining concession - 2B. Available areas and existing mining concessions
Many additional projects are being developed by companies listed on the TSX, ASX, LON, NYSE and other stock markets. In addition, Ecuador has over 100 privately-owned medium scale and small mines in the exploration and exploitation phases, some of which may represent larger-scale opportunities with additional study and investment.
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Ecuador Mining Catalog
2A. Process to obtain a new mining concession
Interested parties may now request new mining concessions via a simple, fast and transparent process Mining Concession Request Process
Prospecting
1
2
Concession request submitted
Prequalification
3
4
Concession posted to website Legend
Submission of proposal(s) (confidential)
5 Evaluation of proposal(s)
Interested Party
6
Swiss Challenge option to match
7
Concession awarded to successful bidder
Exploration and submission of required reports
Ministry of Mining
Prospecting is free, and available to all as established by Ecuadorian law. Existing public information and real-time availability of potential mining concessions is viewable on the internet, for free, at http://visor.geoinvestigacion.gob.ec/areas_mineras
1
Once an interested company or individual has identified a desired mining concession, it may submit a formal request to the Ministry of Mining. Such requests must include at least:
4
a. A work plan detailing exploration plans and expenditure commitments
a. Concession reservation obtained from ARCOM. More information www.arcom.gob.ec b. Documentation proving that the requesting individual or company meets the prequalification criteria of the concession granting process: i. Domicile and good standing in Ecuador. ii. Minimum financial solvency requirements
2 3
The Ministry and its institutions verify compliance with the pre-requisites, and notify the company of successful initiation of the concession granting process.
The Ministry posts the concession request on its website www.mineria.gob.ec, for a period of three weeks, to allow for competing proposals for the mining concession in accordance with Ecuadorian law. All bids must also demonstrate compliance with the pre-qualification criteria.
The interested party and competing bidders, if any, submit confidential proposals, which will not be opened until all proposals are evaluated. The proposals includes:
b. Previous experience of the company and/or team
5
All proposals will be evaluated according to the standard terms of reference posted on the Ministry's website. Because potential mining concessions in Ecuador are generally very early stage, scoring is primarily based on the amount to be invested in exploration of the concession.
6
The evaluation is run as a typical Swiss Challenge, permitting the party who originated the process to enhance its proposal by increasing the investment commitment by up to 100% of its original value to match a competing bid.
7
The concession is awarded to the party that submitted the winning proposal. Competing bids are not required; in the event that no competing bids are received, the concession will be awarded to the initiating party.
The concessionaire must submit required reports each year to demonstrate meaningful exploration activity, evidenced by fulfillment of the investment plan commitment from the concession granting process and the technical results of the investment programs. 25
Ecuador Mining Catalog
2B. Available areas and existing mining concessions
Ecuador's geoportal provides instantaneous, free access to the mining cadaster shown here. The interactive live map, updated in real time, also provides access to public geological, geochemical, and geophysical results and proximity to key infrastructure to facilitate companies' identification of prospecting opportunities.
PACIFIC OCEAN
Mineral potential ranges from gold and copper to less common metals (e.g. uranium) Low level of exploration in the country means potential for additional discoveries
It can be accessed at the following URL:
Legend Cities Concessions In process Registered Granted Notarized
http://visor.geoinvestigacion.gob.ec/areas_mineras
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