President Lasso Meets With Mining Council
It's clear that one of the top priorities of new president Lasso is improving Ecuador's economy and that he values the direct foreign investment and job creation that the responsible mining industry brings. The president sat down with the mining council, which is the type of meeting that can progress industry.
The mining cadastre now has a geoportal where you can see all the mining licenses. Of note is that this official map includes pending licenses. This is another indicator that some of the pending licenses may eventually be granted. In the meantime it's a nice reference of where existing mining claims actually are.
Musings On Social License
Ecuador is not all the same.
At the national level the government is pro mining, but is maybe lacking in regulatory capacity to administer permitting in a timely manner. That may be improving as the current government gets established.
At the province level most provinces aren't opposed to mining. The exception is Azuay province where the city of Cuenca is. There is a good argument to be made that in some provinces like Azuay there aren't indiginous groups with clear rights to historical territorial lands, but that in places where there are indiginous communities that they have pretty much full control over deciding mining activities on their lands.
You can start to see this play out in companies like Aurania reporting local access agreements improving from 31 of 55 to 41 of 55 over the last year.
One I've been following with interest is the Shuar. The Pueblo Shuar Arutam (PSHA) has been vocally anti-mining. However, many Shuar communities are pro-mining. The result has been a patchwork of individual community decisions. Companies like Solaris have strong relationships with the Warints and Yawi. Meanwhile just adjacent claims owned by Solgold 4 of their employees were detained and forced to leave while working in the Timikimints area, I'm assuming this is the Helipuerto claims. Somebody have issued a statement and another statement against mining. I am curious to hear Solgold's side to that story, who they had negotiated access with and who it was that detained their people and expelled them.
My concern has been that eve if you get enough local support for your project if there is regional opposition access can become untenable anyway.
To use a baseball analogy this PEA was a solid ground hit that got the runner on base. It wasn't a strikeout. But it also wasn't a home run.
There's a lot to digest in this PEA. It's a large scale operation with a high initial capex. But it's also a huge resource with a lot of ounces of gold.
In my view the project economics as presented are just OK, which means as presented they don't get funded. Luminex is positining this as just the beginning. Specifically they say "Our team believes that future drilling at Nayumbi and Prometedor will continue to add value to the Condor Project."
I don't expect that adding more ounces through exploration will be used to upsize the project. Instead they will likely be used to add years to the life of mine and to try to improve the grade in early years that have an outsized impact on NPV5. My gut tells me they can add to this project with some more exploration and advance the project to the point that an operator would want to come in and acquire it. But it needs more work than just some infill drilling of their current inferred resource. It still needs some exploration drilling to help improve the project economics into the undeniably good project category.
The first three holes were in this press release, and the company presentation mentions they have assays from the other two with the 4th hole also having large intersections of low grade. This certainly downgrades the Shaki target and is disappointing news. It also doesn't seem like it's vectoring towards higher grade, they hit the target it's just the target turned out to be low grade.
At Cascas they are developing another copper/gold porphyry target in the northwest and an epithermal gold target in the southwest. I'm still pretty hopeful about the southwest gold target they've named Kuru. They stumbled up on it while doing grid sampling of the porphyry target.
There is a lot of luck at play in exploration with even the most skilled of geologic teams. We wish Luminex the best of luck at Kuru.
As Atico keeps drilling out the La Pata project they keep finding economic ore outside the current envelopes.
These latest results confirm additional new zones outside of the known envelopes, more precisely along strike and between North and South Blocks.
Atico is an operator of a mine in southern Columbia and this is in northern Ecuador. It's pretty clear their plan here is to build and operate this as a mine themselves, and it's starting to look like it will make a nice mine.
These porphyryies are a cluster of narrow pencil like ore bodies. But wow, it turns out they are super deep. They also include my two favorite words in a drill result, "from surface".
It will be interesting to see this come together into a PEA someday. The grade isn't particularly high so it might not be good for underground longhole stoping. Open pits will have trouble putting together size due to the relatively narrower widths. But I think the fact that I'm now thinking of how they would get the gold/copper out of the ground means we've moved from wondering if there is something there to thinking about if/how this could become a mine.
Titan also has secured additional drill rigs and completed the sale of the Zaruma mill and mine. No major news, just continued progress.
Porvenir is a nice project and I think at least a few of their 13 priority expoloration projects are likely to work out. New management may even save Cascabel by finding some near surface open pittable resource, high grading, and right sizing the project. They're even on speaking terms with their JV partner again. Not everything is tidy, getting your employees detained and expelled from one of your exploration projects probably means your social license and community relations could use a lot of work.
Have you ever watched the tv show Storage Wars? Solgold reminds me a lot of that. There's a bunch of junk all thrown together and you can't go in and get a good look at any of it. Some of it is clearly junk from a distance but some of it looks like it might be valuable treasure when you shine a flashlight on it from the door, but you can't pick it up to tell for sure. If you start doing a sum of the parts valuation it's not too hard to come up with a potential value of their assets that gives upside to their now sub $600m CAD market cap.
The whole project is small, about 2km x 4km. It's also next to a project that is completely stalled due to social license issues. But it's hard to argue with one of the three historical holes
from:33.0m to:219.0m interval:186.0m Au(g/t):0.33 Cu%:0.16.
Let's see if they can top that in their first few drill holes.
I don't know if there is sufficient gold in the ground on this project or if this is a company that can find it, but here's some more surface work. The timing of the previous fundraise and breakup of the First Quantum JV was, ahm, interesting to the point that I'm following this out of idle curiosity now.
Lumina Has No News
Lumina gold and their Cangrejos project have no updates since February. I still think this will become a major district and will be ripe for consolidation when Salazar and Challenger do drilling on their projects in the district. But for now Lumina seems content to wait.
Of the companies mentioned in this article I have long positions in Salazar, Aurania, & Titan that were purchased in the public markets. I have not received any compensation or special access to private placements from any of the companies discussed.