The Ecuadorian government has announced plans to abolish the
windfall tax which torpedoed Kinross Gold's Fruta del Norte gold
project.
Ecuadorian President, Rafael Correa, recently stated on national
radio that changes would be made to the country's mining laws,
which he acknowledged, "…have been a failure on the part of the
government." Mr. Correa has a PhD in Economics from the University
of Illinois.
The new taxation regime is expected to benefit companies like
Ecuador Gold and Copper Corp. (TSX-V:EGX), which controls five
deposits within the Condor Gold Project in southeast Ecuador
including two development stage projects: Santa Barbara and
Chinapintza – a joint venture with the Chinese Guangshou Group.
"The Ecuadorian government is working on a package of rule
amendments to the mining code," stated Ecuador Gold CEO, Glenn
Laing, in an exclusive interview with Financial Press. "Sources
within the ministry inform us that these new regulations are
expected to be drafted sometime in Q4, 2014."
The new mining laws are expected to change the investment risk
profile of the country, creating interest from larger mining
companies looking for big assets.
"Ecuador Gold has a big asset in its flagship Santa Barbara
Project," stated Laing, "and we expect to benefit from this renewed
interest in Ecuador. We are currently talking to potential joint
venture partners, and deep pocketed financiers to finance the
development of Santa Barbara."
Ecuador Gold has had a very successful exploration program,
completing a 22,500 meter drill program in the Spring and
subsequently announced an expanded resource estimate for the Santa
Barbara South and North Zones. In total, the company's
indicated and inferred gold resources in Ecuador increased 26% to 8
million gold ounces indicated; with 2.6 million gold inferred
ounces at a cost of discovery of $2 per ounce. This type of
resource puts it in the world's top 10% of low discovery cost gold
resources.
"Regarding the Santa Barbara Project, we are moving the
Preliminary Economic Assessment forward," stated Laing. "We have
shipped a half tonne of metallurgical samples to mineral research
laboratories in Denver and we are looking for ways to increase the
metal recovery rates particularly out of the concentrates. You
only get paid for the metal that you extract, so we are very
focused on maximizing that."
The economics of the Santa Barbara deposit will look ever better
in this new taxation world. With a current valuation of less
than $2 per indicated ounce-in-the ground, the stock has a lot of
room to run.
"We anticipate that the PEA will be completed by November,
2014," stated Laing.
On the exploration side, the EGX geological team is also working
on several exploration prospects in and around the Santa Barbara
and the El Hito copper project.
"We have identified and are developing a number of good
prospects on our property," stated Laing, "Some of these are grass
roots projects - potential new discoveries - and others are
brownfields projects that would potentially feed material into the
Santa Barbara project.
"The remainder of EGX's Condor Gold Project is largely
unexplored and there is the potential for a number of large
projects still to be discovered," states Laing.
Ecuador is one of the last largely unexplored mining frontiers.
With Colombia to the north, Peru to the south, the Andes Mountains
gold zone straddles all three countries.
"There is no doubt that Ecuador is losing its stigma as a pariah
state," stated Laing. "President Correa is laying out a welcome mat
for the international investment community. The early
investors have first mover advantage, and they are likely to do
very well."
The exploration scene is not quiet in Ecuador and there are
several new entrants onto the playing field. Ecuador is
"elephant territory" when it comes to potential mineral
deposits.
Mining legend Ross Beaty, who founded Pan American Silver and
the Lumina Copper franchise, recently invested $5 million into Odin
Mining's Ecuadorian exploration project, not far from the EGX
properties. Odin is about to begin a $3 million, 15,000 meter
drill program.
Cornerstone has a portfolio of six mineral properties in Ecuador
covering 455 square kilometers. Exploration programs on two of
the projects are being fully funded by joint venture partners.
In northern Ecuador, SolGold Plc, lead by renowned
mine-finder Nic Mathers, has earned an 85% interest in the Cascabel
project.
EGX has a joint venture with the Chinese Guangshou Group on its
Chinapintza deposit. EGX retains a 30% interest in the 300
tonne-per-day gold project while Guangshou funds the construction
of the narrow vein, high grade deposit.
"The Guangshou Group is advancing the Chinapintza project along
into mine production," stated Laing, "and they are actively
constructing and developing the operation. I expect extraction
to begin in Q2, 2015."
Ecuador Gold and Copper Corp. is currently trading at $0.06 per
share with a market cap of $14.7 million.
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CONTACT: Ecuador Gold and Copper Corp.
5000 Yonge St. Suite 1901
Toronto, Ontario
M2N 7E9
Phone: 1-416-227-3402
Fax: 1-416-628-3801
info@ecuadorgoldandcopper.com