Another Successful Year for SolGold

It has been another busy and successful year for SolGold.

To kick the year off, SolGold released its Maiden Mineral Resource Estimate for the Alpala Project, which tethered on the edge of a globally recognised Tier 1 classification. The aggressive drill programme continued after that, with 12 rigs on site throughout the year working solely on expanding the high-grade core and delivering more intersections toward an ultimate goal to double the Mineral Resource by the end of the year. 

Our Management team travelled extensively this year to promote SolGold and meet with existing and prospective shareholders at a number of different worldwide conferences and company roadshows. SolGold aims to continuously increase awareness on SolGold’s strategy to emerge as a Tier 1 copper and gold producer in Ecuador.

This year saw mining majors BHP and Newcrest Mining further endorse the Company and the Alpala Project by increasing their shareholdings on separate occasions.

In October, BHP increased its holding to 11.2% by subscribing to 100 million shares at 45p to raise £45m (USD $59.2 million) for SolGold, with the intent for the raised capital to go straight back into the exploration budget.

More recently, Newcrest bought another 28.87 million SolGold shares from third parties at a premium price of 40 pence – upping its investment to 15.3% of the Company.

Earlier in the year, SolGold appointed James Clare as a Non-Executive Director to the SolGold Board of Directors and Eduardo Valenzuela as its Study Manager. James and Eduardo will help SolGold's efforts at both corporate and project levels to achieve world class outcomes for shareholders.

Throughout the year, SolGold has completed grassroots exploration across a vast number of the 72 regional concessions which has helped identify 11 priority targets across the spine of the Andean Copper Belt in Ecuador.  

The 11 priority projects are;

-          Blanca

-          La Hueca

-          Rio Amarillo

-          Cisne Loja

-          Salinas

-          Chillanes

-          Sharug

-          Cisne Victoria

-          Timbara

-          Porvenir

-          Cisne Loja Target 15

Ongoing exploration will focus on advancing these priority projects, through geophysical surveys and detailed soil geochemistry, with a view to progress to drill testing as soon as drilling permissions are granted.

All of the 11 priority projects are held within the Company's 100% owned subsidiaries: Carnegie Ridge Resources, Green Rock Resources, Cruz Del Sol S.A. and Valle Rico Resources. 

SolGold was once again recognised for its achievements at the Mines & Money Awards Night in London, winning Mining Company of the Year (Latin America) and our CEO Nicholas Mather, won the coveted CEO of the Year (Exploration), highlighting his ongoing determination and leadership strengths for the second year in a row.

SolGold achieved its main goal for the year and indeed, doubled the Mineral Resource Estimate – with the Alpala Project now being globally recognised as a Tier 1 deposit.

In addition to SolGold’s strong geological work across Ecuador, 2018 saw an increase in our commitment to community projects and environmental impacts. Construction of the Cascabel Bakery was completed and is now baking bread and sweets for the local communities.

SolGold also developed a chicken farm for the surrounding communities and has been an actively involved in the local recycling plant this year.

SolGold is looking forward to achieving another successful year in 2019. Our team is busily working on the Preliminary Economic Assessment which is due for release in the first quarter. 2019 will see ongoing drilling at the Alpala Deposit, and continued exploration across SolGold’s regional priority targets.

We’d like to take this opportunity to thank all of our shareholders for their support throughout the year and wish you all a Merry Christmas and a Happy New Year!  

Ecuador continues to open its doors to the mining industry

Ecuador’s government is continuing to support the development of the country’s mining industry, which for historical reasons is at an immature stage relative to other neighbouring countries such as Chile and Peru, with the full support of President Lenin Moreno.

One of the major recent initiatives includes overhauling the mining tax regime and removing a prohibitive windfall tax on foreign investment.

The windfall tax levied a rate of 70% based upon the difference between the sale price of the metal extracted from the ground and the base price established in the Mining Exploitation Contracts and applied only to large mines in full-scale production.

Henry Troya, Vice-Minister of Energy and Non-Renewable Resources, Government of Ecuador, has said “The windfall tax for extraordinary earnings was our Achilles Heel since it was established by the Correa administration in 2009. We have seen that, when applied in other countries like Mongolia, it affected the mining GDP very seriously. Our windfall tax actually takes 70% of the extraordinary earnings when comparing the base price of the last 10 years and the commodity price during a high cycle. We introduced several modifications to this tax, yet we saw that the investment community could not understand why this was applied. So, president Moreno finally decided to eliminate it. This move has been very well received by the industry.”

Another major initiative was announced by the Ecuadorian government to allow for "scout (reconnaissance) drilling" within exploration concessions. This was announced in July by a representative of the Ecuadorian Ministry of Oil, Mining and Energy (MERNNR) during a presentation at the ‘Investing in LATAM Mining Summit’ held in Santiago, Chile.

As part of this initiative, mining concession holders could drill during the 4-year initial exploration phase through a simplified permitting process. Previously, drilling was only permitted during the advanced exploration phase.

This is positive news for the Ecuadorian mining industry as it is likely to significantly increase the identification of mineral deposits within the initial exploration phase as well as increasing employment, bring more dollars into the Ecuadorean economy and mining investments in the first four years of mineral exploration.

These two major revisions show that Ecuador is committed to developing its mining sector by providing attractive and fair investment conditions which will support the development of responsible mining.

SolGold is highly encouraged by the abolishment of the windfall tax, and the continued progress the Ecuadorean Mining Ministry is making towards better policies. SolGold strongly believes that Ecuador is one of the best jurisdictions for both exploration and development.

Copper to the World

The looming copper deficit has been widely recognised across the world, and the main message from last week’s Copper to the World Conference in Adelaide, is the need for plenty more investments in copper in order to meeting upcoming demand.

The past six years has only seen marginal increases in new copper development projects and this isn’t due to the fact that there aren’t many being discovered.

There has been long-running trend of dropping grades and reserve exhaustion at the world’s current major copper mines, with many of these expected to cease production in the coming years.

Copper deposits are not being discovered quickly enough to meet upcoming demand.

Vanessa Davidson, Director of Copper Research and Strategy at CRU, announced that the pipeline of world class projects heading towards the point of production, remains thin, with only three new major deposits labelled as ‘firm’ for the coming three years. 

However, a significant number of smaller projects have been given the go ahead with many of these expected to start production during 2019.

All of these factors tie in to the overall demand and supply issues forecasted for the red metal. 

Copper is a globally fundamental prerequisite for the survival of civilisation as we know it, and the socially driven high pressure commitment to urbanisation. Copper is the second best metal for conducting electricity, making copper wiring crucial to modern day life.

In addition to this, the fast paced growth of the electric vehicle market has impacted CRU’s global demand growth forecast which has seen a jump in growth over the past 12 months.

The predicted growth has increased by 1.1 million tonnes for 2025 and 2.7 million tonnes for 2035 – with a significant portion of this due to the infrastructure needed for the EV market.

To maintain the current supply levels, there will need to be a number of new projects brought through to production – CRU stated that almost all uncommitted projects are required by 2035.  

Ms. Davidson stated that the most potential for production in located in South America.

As the world comes to terms with the inevitable shortfalls in copper over the next decade, SolGold has been growing its tier one copper gold resource at the Cascabel Project in Ecuador.

SolGold’s CEO Nick Mather said, “We still haven’t defined the edges of the Alpala deposit. Every new drill hole we complete, continues to grow our resource estimate. We believe SolGold is in the ideal position for the forecasted demand and upcoming supply issues.

SolGold is the largest tenement holder throughout Ecuador, actively exploring approximately 3,200km2, additional to its Cascabel Project.

Ecuador is the most underexplored area of the rich Andean Copper Belt – which is renowned for producing almost half the world’s copper.

We saw a “gold rush” of companies entering Ecuador in 2017, after the prospectivity of the country was realised by the majors, and more than 300 new concessions were granted.

There is no doubt we will see a number of new copper mines coming out of Ecuador over the next ten years, and SolGold has first mover advantage.

The Alpala deposit looks increasingly likely to find itself in development at just the right time when copper supplies hit a global frenzy.

Positivity from PDAC

Earlier this month SolGold attended “Ecuador Day” at the Prospectors and Developers Association of Canada conference in Toronto. The day was an opportunity for the mining community of Ecuador to come together to showcase Ecuador’s great potential as a mining destination with competitive advantages and world class infrastructure.

SolGold joined government officials, indigenous leaders, investors and fellow miners to celebrate the country’s progress and talk about the future of the mining industry.

Speaking for the first time on the international stage, Ecuador’s new Minister of Mines, Rebeca Illescas said that she believes “the mining sector will become the second biggest driver of our economy over the next few years, after oil and gas”, and relayed the messaged that President Moreno has been “emphatic and clear that Ecuador will have responsible mining, and that’s good for everybody.”

Minister Illescas told the crowd that she is committed to showing the government and Ecuadorean people the difference between large-scale responsible mining and artisanal, illegal mining.

In the past year, there have been 28 new mining companies in Ecuador. Mining is fundamental to the Ecuadorean economy, however, the industry must be developed in a responsible and sustainable manner.

Moreno and the Ecuadorean government have placed a huge importance on mining responsibly and will only work with international companies that have the highest standards of social and environmental standards. We are delighted that SolGold’s community and environmental work at Cascabel is used to demonstrate such standards.

At a conference held in Ecuador post PDAC to discuss the conference’s key themes and outcomes Minister Illescas also addressed several factors to further improve the investment environment in Ecuador. Minister Illescas has pledged commitment to: improve the cadastre system of allocating concessions; work proactively with the Ministry of Environment to help streamline the permitting process; and improve the legal and tax regime by abolishing the windfall tax.

SolGold is delighted to be working alongside Minister Illescas and the Ministry as Ecuador continues to develop a long-term and sustainable mining industry.

The future is bright, the future is copper

Electric vehicles grabbed headlines throughout 2017 and the buzz has continued in to the New Year. As a result, battery metals have been a focus for commodity commentators, and copper has garnered its fair share of the attention. Surging more than 30%, copper was one of the best performing commodities last year.

January invariably requires market commentators, investors and analysts to review the performance over the past 12 months, and predict what will happen in the coming year. The consensus sees copper demand increasing significantly over global supply in the next decade.

In 2014, there were less than 1 million electric cars on the road worldwide, this grew to more than 2 million in 2016 and the rate at which the world switches to EV is set to snowball. The UK and France have both announced plans to ban sales of new petrol and diesel vehicles by 2040. While China struggles to reduce the levels of air pollution, it is accelerating preparations for the rise of EVs and, the Indian government, set to be the world’s third largest car market within five years, has pledged to sell only EVs by 2030. According to the International Copper Association, as much as 1.74 million tonnes of copper will be needed to meet EV demand by 2027, up from 185,000 tonnes in 2017.

However, the number of labour contracts up for renewal in 2018, is the highest it has been for nearly a decade. During this uncertain time, the threat of strikes is unnervingly high that analysts have started to factor in allowances for potential unrest. BHP’s Escondida mine, located in Chile, is the largest copper mine in the world. Last year it suffered a 43 day strike to protest layoffs. Chile is the world's biggest copper producer, and sales of the metal make up for about 60% its export earnings.

The second supply disruption comes from changes to China’s copper scrap import regulations. China has said they will stop accepting certain types of foreign solid waste, including metals, from 2018 if they do not meet stricter impurity thresholds. This has caused a major stir in the market as China is the world’s largest importer of scrap metal. Analysts say this cuts off a key source of supply for the world’s largest copper consumer and boosts refined copper markets, which are likely to see an increase in demand.

With these market dynamics, exploration and the discovery of new projects is back on the agenda and rapidly climbing through the priority ranks. According to S&P Global Market Intelligence, the mining exploration sector rebounded in 2017, recovering from a protracted period of stagnancy since 2012. The annual global budget has risen to $7.95 billion, a 14% year on year increase. Improving market conditions and higher commodities prices in 2016 have led to increased investment, particularly in junior miners.

However, project discovery takes time and after a period of limited exploration there is now a shortfall in the development pipeline. EY reported capex spent on resource replacement has declined by 66% from US$20.5b to US$6.8b due to lower commodity prices and returns, over the last five years.

Through the support of SolGold’s board, management team, staff and investors SolGold has bucked this trend and has been actively exploring in Ecuador for the past five years. With a potential multi-billion tonne resource, our Cascabel project is mooted to be one of the most attractive mineral properties discovered in the last decade.

Happy New Year

The publication of our Maiden Mineral Resource Estimate on January 3rd sets the tone for what we anticipate to be a very productive year at Cascabel, and our regional projects.

The 1.08Bt @ 0.68% CuEq Maiden Mineral Resource Estimate, with a 120Mt @1.8% CuEq high grade core, is a tremendous start for Alpala but, it is just the beginning. There is already 10,000m of drilling still to be assayed and included in the model, and drilling continues. With 12 rigs working across the site and 120km of drilling planned for 2018 updates to the resource will be reported regularly. The Maiden Mineral Resource Estimate in our view by no means represents a final size or grade because the deposit is still growing.  That the Maiden Mineral Resource Estimate is so big, achieved with so few drill holes and that such a large percentage is in the indicated category is testimony to the size of the system at Alpala.  

With regular updates to the resource estimate and a Preliminary Economic Assessment in sight at Cascabel, exciting regional developments from your projects across Ecuador, and US$100m in the bank, SolGold is firing on all cylinders.

2017 at SolGold

Another year goes by, and what a triumphant year it has been for SolGold.

We end the year as the largest most active explorer in the most under explored and prospective copper belt in the world; with an enviable budget and the largest team of well-trained, exploration geologists in Ecuador.

SolGold’s potential is no longer just in Cascabel, the Company’s upside is Ecuador, where we believe we have the opportunity to discover several world-class projects that will ultimately match or exceed the Cascabel project.

Our pan-Ecuadorian strategy, first unveiled in May, continues to develop, with the country’s Department of Mines recently awarding us 77 new concessions across almost 3,248 km2, and is already showing promise. These new concessions are held by four new 100% owned local subsidiaries; Valle Rico, Green Rock, Cruz del Sol, Carnegie Ridge.

Exploration to date at our 100% owned La Hueca project in southern Ecuador suggests a 25km long porphyry trend, with the best rock chip samples ranging from 1.8% to 13.82% copper over a 5km by 1km area. Other concessions subject to reconnaissance and field mapping and rock chip sampling are Porvenir, San Antonio, Sharug, Agustin and Rio Amarillo. Initial rock chip samples have returned grades of up to 12% copper.

At Cascabel work continues at pace. We have completed over 56,800m of drilling and the Cascabel drilling fleet is constantly expanding.

We are on schedule to release our maiden resource estimate by the end of the year and plan to update this on a regular basis as Alpala Central is still open in multiple directions, Alpala Northwest continues to expand and Alpala East is also showing promise. Over 120,000m of drilling is planned for 2018.

Alongside significant operational progress, SolGold has also made substantial corporate developments. In July, we listed on the Toronto Stock Exchange (TSX) and in October we moved from AIM to the Main Market on the London Stock Exchange (LSE). These developments have provided greater access to institutional investors worldwide and elevated SolGold’s international profile.

Newcrest invested a further USD40m in June to increase its stake in SolGold to 14.5%. Craig Jones has been a very welcome addition to the Board given his operational and block cave mining expertise.

In November, we announced the closing of our £45m bought deal. This puts us in a great position to continue our exploration to advance our flagship Cascabel Project, selective regional exploration in Ecuador, working capital and general corporate purposes.

Finally, as a result of SolGold’s ethos to do things differently we have had huge successes this year, with the SolGold team, Ecuador and our CEO, Nick Mather, being recognised amongst its Latin American peers at the Mines and Money awards in Toronto and globally at the Mines & Money awards in London.

SolGold won the Exploration Award and Ecuador was acknowledged for its measures to further its mining industry, winning the Latin America Country Award for 2017 and the Most Innovative Country.

Our CEO, Nicholas Mather, won the coveted CEO of the Year (Latin America) award and the CEO of the Year (Exploration) in London.

SolGold would like to thank you for your continued and unwavering support. We look forward to another successful year in 2018.

Have a great Christmas and a very happy new year!

Exploration and Innovation

Following a busy week at the Mines and Money conference in London, we have taken time to reflect on the key themes and how SolGold has combined innovation with exploration to achieve outstanding results, and shareholder value.

From our mascot, Solly (the dinosaur on the front of our presentation) to drilling nearly 2000m with a man-portable rig, SolGold has always sought to do things a little differently. We believe it is this innovative approach, which is often criticised by those wanting to follow the norm that is starting to pay dividends now.

Starting with our willingness to take on Ecuador back in 2012, we now have first-mover advantage and the largest tenement holding, in one of the world’s hottest mining jurisdictions.

In addition to being recognised amongst its Latin American peers at the Mines and Money awards in Toronto, Ecuador was triumphant on the international stage, at the London awards, fighting off competition from Armenia, Colombia, Ontario and Queensland to win Most Innovative Country or Region. 

SolGold’s innovation in our exploration strategy has resulted in 10 of the best 40 porphyry copper-gold intersections in history at the Cascabel project and exciting initial results from La Hueca project in Southern Ecuador, was also recognised.

Working with an Ecuadorian drilling contractor, HP Hubbard Perforaciones SA, SolGold has pushed the limits of using a man-portable drilling rig, reaching depths of 1,970m. To save 3 weeks and US$350,000 per hole we have also introduced deviated drilling. Unlike with traditional core drilling, deviated drilling creates multiple branch holes from a mother hole, enabling much more geological information from the one hole and obviates the need to move the drill rig and then waste more time drilling through the same overburden.

Our innovative approach extends to our development plans to Cascabel. While most would head straight for an open-pit mine SolGold is planning a block cave.

In essence, block caving involves carefully undermining an ore body at its base, allowing it to crumble and collapse under its own weight. The ore is then removed via specially designed chutes and bought to the surface for processing.

While block caving entails longer mine preparation and therefore higher up-front expenses, ongoing operating costs are lower because fewer explosives have to be used and less labour is required. As a result block caving is more environmentally friendly, and on first estimates SolGold believes it can half the capex of a 40 million tonne per annum mine using block caving.

As a result of our desire to do things differently both SolGold and our CEO were recognised on an international stage, and for the second time in as many months, by winning the Exploration Award and CEO of the Year – Exploration in London at the Mines and Money Annual Awards dinner.

Our pan-Ecuadorian blueprint for success

Here at SolGold, we are all about copper or, more specifically, top-tier porphyry copper-gold projects across the up-and-coming mining jurisdiction of Ecuador.

To that end our pan-Ecuadorian strategy, first unveiled in May, is going from strength to strength with the country’s Department of Mines recently awarding us 21 new concessions.

These take our total Ecuadorian holdings to 59 tenements across almost 2,500 square kilometres. These are held by four new 100% owned local subsidiaries.

In short, the company holds high hopes of emulating the success at its most advanced project, the world-class Cascabel copper-gold deposit in the north of the country.

“The geology is the same and predictable throughout Ecuador so we have developed a blueprint for the discovery of these things,” says our CEO Nick Mather, who has targeted identifying five tier-one copper-gold porphyry targets across the expanded portfolio.

“We believe that there is potential in Ecuador for several projects that will ultimately match or exceed the Cascabel project,” he says.  “SolGold has taken steps to secure these opportunities with a well organised and thorough exploration program.”

Initial results are highly encouraging, with first-pass exploration identifying 14 copper-gold porphyry targets.

So far we have identified outcropping copper-gold porphyry systems on five targets, notably our 100% owned Machos-Florida-Santa Cruz-La Hueca project in southern Ecuador.

Other tenements subject to reconnaissance and field mapping and rock chip sampling are Porvenir, San Antonio, Sharug, Agustin and Rio Amarillo. Initial rock chip samples have returned grades of up to 12% copper.

At La Hueca exploration to date suggests a 25km long porphyry trend, with the best rock chip samples ranging from 1.8% to 13.82% copper over a 5km by 1km area.

The age of the rocks (Jurassic era) is similar to those at two of Ecuador’s leading projects – Lundin Gold’s Fruta del Norte and the Chinese-owned Mirador – as well as Glencore's giant Alumbrera mine in Argentina.

SolGold’s pan-Ecuadorian success comes amid a land grab by foreign mining giants as the mining friendly regime releases new tenements.

Other active Ecuadorian participants include BHP Billiton, the world’s biggest miner, as well as Fortescue Gold, which is the second biggest Ecuadorian tenement holder behind SolGold.

Gina Rinehart’s Hancock Prospecting also recently won a concession while Barrick Gold and Newmont Mining also are reportedly keen on entering the country.

According to Mining Minister Javier Cordova, $US700m of foreign investment has already been committed, with this figure expected to rise to $US8bn by 2024.

Ecuador sits on the North Andean copper-gold belt. However, unlike in neighbouring Peru and Chile, the geologically fecund zone has not been well explored in Ecuador because the country has been off limits to miners until only recently.

SolGold has had an Ecuadorian presence since 2012 and was one of the first foreign miners to tap on the doors of the newly formed Mining Ministry in 2014, when a freeze on tenement applications was lifted.

We have spent about $50m on exploration and development in Ecuador so far, generating economic activity of about $200m.

SolGold is also building its own technical team with a view to development and production. This includes doubling the number of local geologists we employ to 100 next year.

Any projects are likely to be funded by third parties, with negotiations already taking place.

 “In the past, juniors had to go to majors to get their projects developed but now there are broader options available to finance development,” Mather told the Mining Journal.

“The capital markets are deep and the expertise is available to build mines yourself.”

Ecuador’s underexplored status, its prospectively and the upside in the copper market all present an extraordinary opportunity to grow the company into a globally significant resource explorer, developer and miner.

The surging global copper price – up more than 20% in the past 12 months - adds weight to the likelihood that our pan-Ecuadorian strategy will succeed.

Trifecta of honours for SolGold and Ecuador

Our successes to date in developing the Cascabel copper-gold project in Ecuador have been recognised with the company winning two gongs at the prestigious Mines and Money Americas’ annual achievement awards.

Just as importantly, Ecuador itself has been acknowledged for its measures to further its mining industry, winning the Latin America Country Award for 2017.

According to Anthony Vaccaro, group publisher of the Northern Miner Group, Ecuador generated significant “buzz and investor interest” during the year.

Our CEO Nicholas Mather left the gala dinner -- held in Toronto and attended by 300 mining industry representatives - brandishing the coveted CEO of the Year (Latin America) award.

And SolGold itself won the Latin America exploration award.

The 3 wins cap off an exciting period for the company, which also this month was promoted from the AIM exchange to the London Stock Exchange main board (under the ticker SOLG).

The awards are apt recognition for our progress at Cascabel, our 85%-owned flagship copper-gold porphyry project in northern Ecuador, 180km from the capital Quito.

The board believes the advanced exploration project - described in some circles as one of the world’s top five undeveloped copper deposits - has significant potential to host an economic resource.

More work needs to be done before the resource can be validated and we are leaving no stone unturned with a 122,550 metre drilling program due to be completed by the end of the year.

A recent 30-hole program on the key target, the Alpala mineralisation, produced 10 holes with consistent grades of more than 1% copper. In an update on 6 October, the company reported assay results from two further holes grading up to 1.37% copper equivalent.

Ahead of the LSE promotion, the board told shareholders that 91% of SolGold’s current cash balance of $US65 million would be spent directly on the project. The number of active rigs on the project has also been increased from 10 to 12.

Having a promising project in the right geography – in this case the famed Andean copper belt -- is one thing. Being in a supportive jurisdiction is another. Ecuador’s recently elected government under president Lenin Moreno is pulling out all stops to develop the country’s mining industry, which for historical reasons is at an immature stage relative to other neighbouring countries such as Chile and Peru.

The reforms come on top of moves already undertaken by the previous government, including overhauling the mining tax regime and removing a prohibitive windfall tax on foreign investment.

In a bid to attract $US4.6 billion of foreign investment over the next four years, the government has also embarked on wider economic reforms including more flexible labour laws and investment in new infrastructure, including ports, hydro projects and roads.

Accepting Ecuador’s Mines and Money award, Ecuador’s Minister of Mining Javier Felipe Cordova said the accolade was proof the country was on the right track with its partnering approach to foreign investment in the industry. Indeed, the reforms are based on 139 proposals received from a group of local businesspeople.

 “I take a lot of pride in our teamwork,” he said. “We did this together and I have to thank the companies that have trusted in Ecuador.”

Sharing the podium, Mr Mather praised Ecuador’s ongoing efforts in encouraging foreign investment.

Simply put, the company believes Ecuador is currently the best place in the world to develop a mine. Having been in the country since 2012, we believe we have a first-mover advantage over other foreign entrants.

Ecuador: the new magnet for copper explorers

With copper prices at two-year highs amid bullish demand dynamics and supply constraints, the major mining houses are once again focused on exploring for the world’s most widely used industrial metal.

The trouble is, many of the geographies with the best deposits of the red metal are under a cloud for political or regulatory reasons.

Indonesia, for example is viewed as a difficult jurisdiction because of widespread corruption and shifting regulatory goalposts. 

Until recently, Ecuador has been a hidden gem. But thanks to an active program of mining law reforms and investment, the South American nation is now in the sights of the major miners including BHP Billiton, Fortescue Metals and First Quantum.

SolGold, which has operated in the country since 2012, has a first mover advantage as it furthers its flagship world-class Cascabel copper-gold deposit in the country’s northwest.

With a potential multi-billion tonne resource, Cascabel (discovered in 2013) is seen as one of the world’s top five undeveloped copper-gold deposits.

Ecuador is located on the prolific Andean copper belt that accounts for almost half of the world’s copper production. Think of giant mines such as Chile’s Escondida, Chuquicamata and El Teniente projects.

While South America’s mining legacy dates back thousands of years, Ecuador has been underexplored for several reasons.

One is that unlike the barren Chilean copper belt, Ecuador is well vegetated so the rich mineralisation has been well hidden.

Other reasons are political and economic: until 2010, Ecuador was a closed to foreign miners because the government focused on oil revenues from the Western Amazon basin.

But with this income declining, president Raffael Correa’s government adopted a more mining-friendly stance. Even though Leftist candidate Lenin Moreno replaced Correa in April, the reform momentum continues.

Ecuador’s new mining push has been marked by increased investment in infrastructure, the creation of a discrete Mines Ministry (in 2015) and the ongoing development of a mining code including an amenable tax regime.

Since the ministry was formed in 2015, the government has issued 300 new exploration concessions. The government has also relaxed a 70% tax on windfall mining profits that was discouraging investment.

In what Mining Minister Javier Cordova dubbed a “landmark in industrial mining in Ecuador”, the government and Canada’s Lundin Gold signed a contract in December to develop the country’s first operating mine, Fruta del Norte.

Fruta del Norte, in the country’s south, is also among the world’s highest grade undeveloped gold projects. And Cordova has made it clear he wants the project to be the blueprint for other explorers to unearth similar deposits.

Ecuador is undergoing a broader economic transformation, with investment in new infrastructure including 5 ports, 10 hydro projects and 10,000km of new highways.

On BMI Research estimates, Ecuadorian mining investment is expected to hit $US4 billion by 2021. Over that time, the value of the sector is expected to jump from $US1.1bn to $US7.9bn.

As for SolGold, our title is somewhat of a misnomer because our key focus is on finding world-class porphyry copper deposits – and that’s what led us to Ecuador.

SolGold owns 85% of ENSA, the joint venture vehicle, and Cornerstone has the remaining 15%.

The Cascabel project lies just off the well-made main road, a 3-hour drive from Ecuador’s capital city of Quito. It’s also on a lower altitude to the major Chilean projects, which means easier operating conditions with aspects such as access to water.

The project’s potential was validated when Newcrest Mining (Australia’s biggest listed goldminer) paid $23m for a 10% stake in SolGold in 2016.

Overall, SolGold has 59 concessions across Ecuador, covering 2,500 square kilometres but our focus remains firmly on Cascabel, which consists of 15 separate targets – and 15 potential winners.