Ecuador mining reforms good news for Lumina Gold's project
Canadian gold junior Lumina Gold (TSX-V:LUM) (OTC:LUMAF) said Tuesday that recent changes introduced by Ecuador to mining regulations will allow the company to boost exploration at its Cangrejos gold-copper project.
The reforms, enacted by the country's Ministry of Energy and Non-Renewable Natural Resources, let companies perform non-systematic drilling during the early exploration phase of their mining concessions. Drilling activities were previously only permitted during the advanced exploration phase and required an environmental license.
Lumina said the change will enable it to explore previously untested areas on the west side of its Cangrejos deposit (C20), as well as the Gran Bestia satellite deposit, located about 1km away, where Newmont Mining previously drilled 978 metres over five holes in 1999.
Lumina said the change will enable it to explore previously untested areas on the west side of its Cangrejos deposit.The tests will help Lumina determine whether Gran Bestia contains mineral resources that would add to the existing Cangrejos deposit and mine plan. The Vancouver-based junior also plans to check whether mineralization at Gran Bestia connects to the existing Cangrejos deposit.
The changes in Ecuador's mining regulations, said Lumina, will also allow it to start drilling at the Orquideas concession, which is part of a five-year earn in deal the company signed last month with First Quantum Minerals (TSX:FM), provided appropriate water authorizations are in place.
The Cangrejos gold-copper project, located in southern Ecuador, has an operational life estimated in 16 years, with an annual payable production of 373,000 ounces of gold and 43 million pounds of copper.
The company expects to process 40,000 tonnes of ore per day in the first five years of operation, growing to 80,000 tonnes a day in year six.
Initial costs for the project, located in El Oro Province, including working capital, are pegged at $831 million, while the planned expansion would need further $406 million.
Ecuador has gained ground as a mining investment destination in the past two years thanks to a revised regulatory framework and a major investor engagement campaign that has already attracted around 420 applications for concessions in less than a year.
In March, Anglo American (LON:AAL) became the latest big miner to land in the South American country. Through a deal with Lumina Gold itself, the company plans to develop two copper and gold concessions there.
Currently, the nation's emerging mining sector employs 3,700 people, but the government estimates the figure will rise to about 16,000 in the 2017-2020 period.
Project location. (Courtesy of Lumina Gold.)