Alpala

Alpala, our flagship project, has produced some of the greatest drill hole intercepts in porphyry copper-gold exploration history

Regional Projects

Our Pan-Ecuadorian Strategy

Mining in Ecuador

Mining is on track to become the 2nd pillar of Ecuador’s economy

Sustainability

We are committed to a sustainable approach

PHASE 1

Initial exploration

4 Years

PHASE 2

Advanced exploration

4 Years

PHASE 3

Economic Evaluation

2 Years

PHASE 4

Exploitation

12 PRIORITY
PROJECTS IDENTIFIED

72 carefully selected concessions which are perceived (by SolGold) to be the most prospective areas granted across
Ecuador 100% owned in four subsidiaries.

Legislation in Ecuador, specifically in the mining sector, has made great strides in recent years.

MINING IN ECUADOR

Environmental Considerations

 Exploration and mining activities in Ecuador are subject to provisions of the Mining Act, 2009 (Ley de Minería). According to the Mining Act, the holders of mining licences must obtain and submit environmental studies to prevent, mitigate, control and repair the environmental and social impact resulting from such activities.

The Environmental Department of the Ministry of Energy and Mines is responsible for the approval of the environmental studies of the Project. According to the Environmental Regulation for Mining Activities (Reglamento Ambiental para Actividades Mineras), the required environmental studies are:

  • Environmental Impact Preliminary Evaluation (“EIPA”). The EIPA is a general environmental study which describes the environmental components, project activities, potential environmental effects, and planned prevention, correction, and/or mitigation measures.
  • Environmental Impact Assessment (“EIA”), The EIA is a detailed, multidisciplinary technical study which identifies and evaluates the potential negative environmental effects and details specific preventative or corrective measures for the effects.
  • Environmental Audit (“EA”). The EA provides a means of assessing and controlling the measures proposed in the EIA and legal framework.

In August 2013, an Environmental Licence for advanced exploration including drilling was issued by the Ecuadorean Ministry of Environment. SolGold has commenced acquisition of landholdings in the Cascabel project area in anticipation of infrastructure requirements for the project development. As of the 30th of November 2018, SolGold has purchased 686 hectares with negotiations ongoing on other properties.

SRK has not carried out any legal due diligence relating to the Environmental Licence. There are no existing environmental liabilities on the property.

MINERAL RIGHTS IN ECUADOR

Mining in Ecuador is mainly governed by the Mining Act (“MA”), issued on 29 January 2009 and the General Regulation of the Mining Act (“GRMA”), issued on 16 November 2009, which regulates activity as a whole. The MA and GRMA recognise, regulate, and classify mining activities depending on production levels, namely: large-scale mining; medium-scale mining; small-scale mining; and artisanal mining.

To conduct exploration in Ecuador, a mining licence must be granted by the Ministry of Mining and registered with the respective mining registry managed by the Agency for Regulation and Control of Mining (“ARCOM” (Agencia de Regulacion y Control Minero)). The term of a mining licence is 25 years and is renewable for similar periods upon request by the licence holder. Once the licence has been granted, exploration may be conducted for a four-year term, which is identified as the initial exploration period and governed by Article 6.

The holder of the licence is entitled to request a further four-year period from the Ministry of Mines, under Article 7, to proceed with advanced exploration. At this point, part of the exploration licence will be relinquished, although there is no legislated minimum area to be dropped. The Ministry will process this application provided the company has met the minimum investment commitment during the initial exploration stage and submitted a plan of activities and minimum expenditures contemplated under the advanced exploration stage.

Other aspects of the Mining Act that are considered to be pertinent are described as follows:

 

TAXES AND ROYALTIES

The holder of the licence is subject to other taxes, payments and contributions such as:

  • Income Tax – 25% of profits
  • Labour Profit-Sharing Tax – 15% (12% to the State and 3% to employees in the case of large-scale mining, and 10% to the State and 5% to employees in the case of medium- and small-scale mining)
  • Value Added Tax – 12%
  • Municipal taxes and contributions, social security contributions
  • Annual conservation fee that the holder of the licence shall pay for each mining hectare by March each year – This equates to 2.5% of the government mandate “basic salary”, currently US$394, per hectare of the mining licence for the initial exploration period for fiscal year 2019. This doubles to 5% of the basic salary per hectare for the advanced exploration and economic evaluation periods, and doubles again to 10% during the operational phase of the mining licence.

In addition to the taxes outlined above, the holder of the licence must pay to the State a royalty of no less than 5% of the value of all sales and no more than 8% for the sale of gold, silver and copper (large-scale mining). For medium and small-scale mining, the royalty is 4% and 3% respectively, while artisanal mining is not subject to royalties.

The Ecuadorian government has various taxes, duties and levies that may or may not be applicable to future mining operations depending on the mining exploitation contract established between SolGold and the Ecuadorian government and the laws in force at that time.

 

REGARDING SURFACE RIGHTS

The holder of a mining licence has an easement over the surface land in order to duly exercise its mining rights. The rights emanating from this easement include, among others, the right to occupy certain areas for constructions required for mining activities, as well as rights related to waterways, railways, landing strips, ramps, transport belts, and electrical installations. The easement must be registered in the mining registry managed by the ARCOM.

The owner of the surface land is entitled to receive payment from the holder of the mining licence for the easement granted. In certain cases, the easement rights, including terms and conditions, are expressly agreed to in contracts executed between the holder of the licence and the owner of the surface land. If no agreement is reached, ARCOM may order the creation of the easement and determine the mandatory payments due to the owner of the land.

SRK understand that SolGold holds all required permits and easements to operate across the Alpala deposit.

In August 2013, an Environmental Licence for advanced exploration including drilling was issued by the Ecuadorean Ministry of Environment.

On July 26, 2013, the National Water Secretariat for the Mira Hydrographic Demarcation resolved to grant ENSA the right to exploit the waters of River Mira, to be used during the execution of the advanced mining exploration period at the Cascabel Project. The water concession is valid for a renewable term of ten years. The water intake shall be used in mining and industrial exploration activities within the area authorised by the Ministry of Mines. ENSA shall pay US$0.0039 per cubic metre to the National Water Secretariat.

Two Concessions for the Use and Consumption of Industrial Water been granted for the Cascabel Project for advanced exploration activities. These ten-year licenses were approved in July 2013 and August 2017. The combined concessions allow extraction from a maximum of 14 points or water sources (water collection points are included for use in advanced exploration activities and for use in camps); and an authorized flow rate of 1.5 l/s for each point.

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