Lumina, First Quantum Formalize Ecuadorian Excursion

Canadian miners Lumina Gold (TSXV:LUM) and First Quantum Minerals (TSX:FM) are now bound together after the two signed an earn-in agreement for Lumina’s Ecuadorian gold–copper concessions.

Lumina announced the news on Thursday (June 21), which will see First Quantum contribute US$1.5 million in the next year for exploration on two concessions, Orquideas and Cascas.

The two concessions are located near Lumina’s Condor project in the Zamora-Chinchipe province of southwest Ecuador.

According to Lumina, exploration work is already underway at Orquideas and Cascas where it is acting as operator, with First Quantum’s ‘supervision’.

Under the terms of the earn-in agreement, which was first revealed to be in the works last year, First Quantum is to commit US$1.5 million in the first year of the five-year agreement, and has “the option of contributing up to an additional US$37 million over the course of the subsequent four years.” The two companies had said they would work towards formalizing the agreement by the end of 2017.

Included in the US$1.5 million is an immediate payment to Lumina of US$100,000, and the smaller company will be ‘reimbursed’ US$840,000 for work already conducted between September 2017 and May 2018.

If First Quantum decides to continue beyond the first year, for its US$37 million it will acquire 51-percent ownership of the concessions, and will have the right to pursue an additional 19 percent if it solely funds all exploration up to when the partners decide whether to pull the trigger and commence mining operations.

Since the first announcement of the earn-in agreement in October last year, Lumina has been confidently barreling ahead.

“At Orquideas, phase one line-cutting is complete and an induced polarization geophysical survey is well advanced, with approximately 95 percent of the 34 kilometre survey now completed,” said Lumina.

“An additional 12 kilometres of infill induced polarization lines are planned as a follow-up …the induced polarization chargeability results continue to show good correlation with known copper-molybdenum anomalies and mineralized structures at surface.”

The company added that works were so advanced and results so promising that it has requested the Ecuadorian government change the concession to an ‘advanced exploration’ concession that will allow drill testing.

Lumina said that at the other concession, Cascas, it was planning to investigate preciously discovery porphyry copper mineralization based on 1,325 samples. The company believes that the copper-molybdenum footprint covers an area spanning 5 by 2.5 km.

“Adjacent to this anomaly to the southeast is a distinctive gold anomaly spread over an area of 3.0 by 2.5 km. A new geological map has been developed that will guide follow-up exploration efforts.”

Lumina’s nearby Condor project is 90-percent owned by the Canadian company, and has an indicated resources of 1.4 million ounces of gold, 9.2 million ounces of silver and 43 million pounds of copper, and an inferred resource of 2.5 million ounces of gold, 7.9 million ounces of silver and 260 million pounds of copper.

Lumina also wholly owns another gold-silver-copper project in the South American nation, the Cangrejos project, where a preliminary economic assessment is underway and expected soon.

First Quantum has six operating mines in Africa, Europe and another in Turkey, as well as a seventh mine under care and maintenance in Australia. Primary involved in copper, gold and zinc, the Canadian company has another four projects under development in South America and Africa.

First Quantum had made the news lately when it backed out of negotiations to finance the controversial Pebble project in Alaska in return for a 50-percent interest in the copper-gold project.

On the Toronto Venture Exchange Lumina Gold has not moved an inch with the news, and is trading at C$0.72. First Quantum didn’t move much either, trading at C$20.27 on the TSX, up 0.2 percent.

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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.