A recent Constitutional Court ruling about a proposed referendum in the Ecuador province where copper/gold developer SolGold’s significant Cascabel project is located has made it clear that the future of mining will be determined by that country’s federal government, the LSE- and TSX-listed miner said on Thursday.
SolGold said that the ruling highlighted that it was unconstitutional to ask inhabitants of certain provinces about the matters relevant to other provinces, and that mining was considered a matter of national interest, and hence could not be opined upon by the inhabitants of a particular province.
The petition for a referendum only made it to the first formal test of a two-step process, where the court considered the motivation and rationale and was rejected in this phase.
“SolGold is heartened by the strong presentations by the government showing the importance of a properly regulated mining industry to the development of the national economy and social and physical infrastructure of Ecuador. SolGold is also heartened by the strong local submissions in favour of mining generally and the social and economic importance to the local and regional communities,” it said in a media statement.
The preliminary economic assessment (PEA) for the Alpala deposit in the Cascabel project indicated that the government and people of Ecuador stood to benefit from $17-billion in taxes, royalties and profit shares.
The PEA for the Alpala copper/gold/silver deposit delivered “outstanding financial metrics”, with a startup capital expenditure of $2.4-billion to $2.8-billion, a net present value range of $4.1-billion to $4.5-billion, at an 8% discount, and an internal rate of return of between 24.8% and 26.5%.
The study has put forward four production cases, ranging from 40-million tonnes a year to 60-million tonnes a year, with an estimated mine life of between 49 years and 66 years. Based on the 50-million-tonne-a-year mining scenario, the Alpala deposit is estimated to produce 207 000 t/y of copper, 438 000 oz/y of gold and 1.4-million ounces a year of silver in concentrate in the first 25 years of operations.