Ecuador Mining News Roundup Mid Febuary

National News

Presidential Election

Andres Arauz was the leading vote getter and is expected to win the general election, but didn't get quite enough votes in this first round to win outright, so it goes to a runoff in April.  Arauz is a trained economist and a socialist who plans to back out of an IMF deal.  He generally is considered to be in favor of responsible mining. Ecuador's currency is pegged to the dollar, the country needs some dollar denominated exports from mining, it needs the tax revenue to cover some of its budget shortfall, and the Ecuadorian people need jobs that mining provides.

In a dead heat with 99.x% reporting Yaku Perez and Guillermo Lasso's are too close to call, though it looks like Lasso has taken a slight lead.  There will be a recount.  Only one will get the honor of having their name in the runoff election and losing to Andres Arauz.

Guillermo Lasso is the most vocally in favor of responsible mining.  His support largely comes from urban areas like Quito.  He has run several times for president and 20% seems to be his cieling of support.  

Yaku Perez was formerly known as Carlos Perez but changed his first name to Water (Yaku) in the local indigenous language.  If you look at where his votes came from it is the Eastern part of Ecuador with more indiginous people.  He has been vocally anti-mining, leading the Cuenca anti-mining referendum.  However, second hand I have heard that engineer-type Ecuadorian's think he actually would be more likely to cede to local control of mining instead of having a single national policy.  Many areas of Ecuador are clearly in favor of responsible mining.

Cuenca Anti-Mining Referendum

There isn't official word on the count, but everyone thinks the Cuenca anti-mining referendum  passed by a wide margin.  It is expected that there will be an exclusion zone established around the five rivers in the Azuay province that drain to Cuenca, but nobody knows what the boundaries of that zone will be.  It is also highly uncertain how this will affect existing projects like INV Metals that already have mining licences but haven't finished environmental permitting.  

The best thing for Ecuador as a country would be continued rule of law so that companies would continue to invest in the country.  That would mean existing mining licences like those given to INV Metals before they invested millions of dollars developing their project would be honored, but new mining licenses in the exclusion zone would not be granted.  

There is also concern that a few projects in Azuay province that don't drain towards Cuenca may have issues with an overzelous government trying to apply the referrendum beyond its scope.  Then the quesion remains if other cities in Ecuador might have similar referrendums.

This referrendum is a reminder that Ecuador is not a single place.  If we trace a line down the continental divide all the land on the west side that drains to the Pacific seems to have social license for mining.  The east side of the continental divide social license seems much more hit or miss.  You can still do business east of the continental divide, as Fruta Del Norte and Mirador show, but it's a good idea to go in with much more sensativity and with a lot more active community programs and seeking as much public input as possible.  

Company News

Solgold Issues Statement on Apala PFS and Porvenir Drill Results

There has been a lot of criticism of Solgold's timelines and cost estimates for underground block caving.  It appears Solgold has been listening.

Back in October 21st Keith Marshall was appointed to the Solgold Board.  Keith has extensive underground block caving experience at Rio Tinto, including with the over time and over budget Oyu Tolgoi project in Mongolia.  November 10th the Apala project committee was formed with Keith heading it up.  Jan 19th Nicholas Mather steps down as CEO and Keith steps in as interim CEO.  Now Solgold is basically announcing the entire Apala/Cascabel plan is being reworked.

It sounds like the new plan is to find some open pittable resource that they can use to start feeding a mill while the underground is being developed.  Also to completely re-work the underground plan to focus on a lower-volume higher grade produduction in the early years.  

While the Apala project continues to be messy things are going great at the Porvenir project.  Porvenir continues to come out with jaw droppingly long intervals from surface.  We agree with Solgold that "preliminary 3D geological and numeric modelling that suggests the target may be amenable to large tonnage open-pit mining methods".  

In the first few drill holes I'm completley sold on Porvenir being a world class project.  The question that remains outstanding in my mind is if Keith Marshall can rescue the Apala project which is advertised as a world class project into actually being one.

Salazar Gives Assay Results from Oso-1 & Oso-2

These are the first two holes into a never before drilled property.  I'd love it if every hole an exploration company drilled was a discovery hole.  Life doesn't always work out that way.  Let's evaluate these drill results compared to Cangrejos, the nearby project Los Osos is looking to emulate.

Oso-1 has 0.58g/t gold & 0.02% copper for 69m from surface and is the kind of hole that could be included in a large bulk tonnage open pit mine resource.  The average Indicated grade of the main Cangrejos deposit is 0.59g/t gold and 0.12% copper and the average Indicated grade of Cangrejos' Grand Bestia deposit is 0.46g/t gold and 0.08% copper.  

On the glass half empty side I would like to have seen: higher copper in Oso-1, Oso-1 gold levels in the first 69m to carry for the full 243m from surface, and for Oso-2 to have hit more than just a deep narrow vein.  On the glass half full side I look at those drill results and want Salazar to keep drilling on the property.