Gold Mining in Ecuador

The birth of a new mining landscape

The year 2018 was a transformative one for Ecuador's mining industry. It all started when the country’s newly appointed Vice Minister of Mines Fernando L. Benalcazar took a bold stance — revealing an aggressive plan to grow the country's mining sector from 1.55 percent of its GDP to an impressive 4 percent by 2021. Unfortunately, that goal was never achieved and mining represents 1 percent of the country’s GDP today.

And yet, the mining sector in Ecuador has never looked more promising. How so? This can largely be traced back to 2019 when the country's mining landscape significantly changed after Lundin Gold (TSX:LUG,OTC Pink:FTNMF) acquired a previously abandoned project and reached an agreement with the Ecuadorian government to further develop it.

Flash-forward to today and the now-prolific Fruta del Norte project is not only Ecuador's first large-scale modern gold mine — it's also the country's largest producing gold mine. Plus, Lundin Gold is not the only major mining company that's staked its claim on Ecuadorian soil. Several other companies are actively investing into developing projects in the country.

One example is the Cascabel project, a joint venture between Solgold (TSX:SOLG,OTC Pink:SLGGF) and Cornerstone Capital Resources (TSXV:CGP). Situated on a porphyry copper-gold deposit in Northern Ecuador, the mine recently underwent a pre-feasibility study with incredibly promising results.

Also of note is the fact that BHP (ASX:BHP,LSE:BHP,NYSE:BHP), the world's largest mining corporation, became Solgold's largest shareholder in 2019. Newcrest Mining (ASX:NCM) is another major investor.

Expected to begin production by 2025, Cascabel is one of the four largest developing projects in the country. The other three are all currently in the advanced exploration stage, expected to be operational by 2023. These are Dundee Precious Metals' (TSX:DPM) Loma Larga, Adventus Mining's (TSXV:ADZN) Curipamba and Atico Mining's (NASDAQ:ATY) La Plata.

The Chinese-owned Mirador copper-gold project is another major contributor to Ecuador's current mining growth. Owned and operated by a subsidiary of a state-owned consortium, it is Ecuador's first industrial-scale copper project. Mirador exported its first shipment of 22,000 tonnes of copper to China in January 2020.

Last but certainly not least is the San Carlos Panantza mine, owned and operated by the same subsidiary that owns Mirador. Situated in the Corriente Copper Belt, it represents one of the largest copper reserves in the world. However, the mine has been non-operational since 2020 due to resistance from members of the Shuar indigenous community.

Although the mining sector is still relatively new and its infrastructure is still underdeveloped, the presence of so many titans of industry is a very positive sign. It demonstrates long-term confidence that the region is a sound investment.

The strong relationship between Ecuador and Australia

Since Australia is a major investor in the Ecuadorian mining sector, the two countries have worked closely with one another on an international level for several decades. This has most recently taken the form of several Memorandums of Understanding (MoUs) on work and holiday visas, mining cooperation, air services and political consultation. Australia and Ecuador also work closely with one another at the educational level, and have established several additional MoUs with Australian universities.

Although there is no official free trade agreement between the two countries, both are members of the United Nations, World Trade Organisation, World Bank and International Monetary Fund.

All of these collaboration has culminated in a positively massive Australian presence in the South American country, sparked at least in part by BHP and Newcrest's Solgold play. Other Australian mining and exploration companies with a foothold in Ecuador include Fortescue Metals Group (ASX:FMG), Hancock Mining, Titan Minerals (ASX:TTM), Tempus Resources (ASX:TMR), Challenger Exploration (ASX:CEL) and Sunstone Metals (ASX:STM). Of these, Titan Minerals could be a promising entry path to Ecuador.

An exploration and development company focused on potential tier one projects, Titan Minerals' holdings include the Dynasty gold project, Copper Duke project and Linderos project.

As Titan's flagship project, Dynasty's foreign resource estimate totals 2.1 million ounces at an average grade of 4.5 grams per tonne gold. Located in the Loja province of southern Ecuador, Dynasty consists of five concessions across a total area of 139 square kilometres. Titan plans to continue expanding the resource and exploring its underlying porphyry potential as it continues to develop its other two projects.

Located roughly 18 kilometres east of Dynasty, Copper Duke covers a total area of 130 square kilometres. Preliminary testing indicates geophysical characteristics similar to many regions that host tier one assets. The project also contains geophysical anomalies consistent with the presence of high-grade gold and copper.

Lastly, the Linderos project is located 20 kilometres southwest of Dynasty, in a corridor of mineralisation that extends from Peru through Northern Ecuador. It comprises four contiguous concessions across 143 square kilometres. Titan Minerals is currently engaged in an advanced-stage exploration plan that has already demonstrated great promise.

Takeaway

Ecuador's mining sector is still very much in its infancy compared to other nations of the world. However, the region shows enormous promise, particularly for Australian investors. The presence of major companies such as Newcrest and BHP is indicative of that and has served to draw many other organisations.

This INNSpired article is sponsored by Titan Minerals (ASX:TTM). This INNSpired article provides information that was sourced by the Investing News Network (INN) and approved by Titan Mineralsin order to help investors learn more about the company. Titan Minerals is a client of INN. The company’s campaign fees pay for INN to create and update this INNSpired article.

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