Australia’s SolGold plans to begin construction of the Cascabel copper-gold project in northern Ecuador in the fourth quarter of 2024.
According to the pre-feasibility study, the Alpala deposit contains 9.9 Mt of contained copper, 21.7 Moz of gold and 92.2 Moz of silver in measured and indicated resources.
BNamericas spoke with SolGold Ecuador Vice President Andy Taunton about Cascabel and the prospects for mining in the South American country.
Numerical: How is the $4.8 billion the company has announced for investments over the next nine years being distributed?
Taunton: US$2,746n represents the capital expenditure to complete the first production.
This investment will continue from 2024, the date of the start of construction, and should be spread over approximately five or six years.
Mine construction will require US$900 million, processing plant US$465 million, tailings storage facility US$309 million, port facilities US$39 million, surface infrastructure 175 million million US dollars, indirect costs 467 million US dollars and contingencies 391 million US dollars.
After the first production, the investment will amount to 2.136 billion dollars, which includes the amount necessary to reach maximum production, i.e. 25 Mt/year of mineralized rock processed by the plant, and also includes maintenance capital to keep the plant running.
Numerical: What other production facilities will be built in addition to the mine?
Taunton: The processing plant, tailings dams, a pipeline that will transport the waste from the plant to the tailings area, which is outside the lease, and there is also another pipeline that will transport the concentrates to the port of Esmeraldas.
In Esmeraldas we will have an infrastructure where we will remove the water from the transport system and let the dry concentrate be exported from the port.
We have also planned a power line that will start from the north of Ibarra to connect to the national grid.
Numerical: What role will technology play in this mine and what systems will be used for water treatment?
Taunton: The intention is to use the best technologies possible. Cascabel’s intention is to be an example of a mine with high production, high technology, high attention to the environment and good relations with the communities where we work.
The water we will use to transport the concentrate from Cascabel to the Port of Esmeraldas is sent back to Cascabel and reused. We are not going to throw the water into the ocean, we are going to reuse it.
Numerical: Has the company already thought about where it will refine the production of Cascabel?
Taunton: It’s a bit early to decide exactly where. There are options in Asia, there are options in the United States, if I remember correctly in Chile there are several options but it’s still too early.
Numerical: How are SolGold’s other concessions in Ecuador right now? Has progress been made in seeking alliances with other companies?
Taunton: Several companies are currently in talks with us. We have presented a series of concessions to see if any of these companies are interested in partnering with us to develop the other areas we have.
We have selected two. One is Porvenir, which is far to the south, in Zamora Chinchipe, and the other is Helipuertos, very close to Solaris, in Morona Santiago.
We will focus on these two as they are the best results so far. We need to focus on activities independent of what we have in Cascabel. Several concessions are targeted by other companies.
Numerical: What happened to La Hueca and Blanca, where you started drilling?
Taunton: La Hueca is part of the Third Interest Group. We also offered Blanca to the same group.
According to the law, we have to carry out activities for four years, but there are things that are beyond our control, such as COVID, with which we lost several months.
We need to focus where we have the best performance, but also propose to third parties if they are interested in partnering, if possible later, for further exploration.
Numerical: What are the main hurdles Ecuadorian mining currently faces in terms of paperwork and regulations?
Taunton: Under President Guillermo Lasso, the importance of responsible mining has been recognized.
The operations of EcuaCorriente in Mirador and Lundin Gold in Fruta del Norte have economically transformed the province of Morona Chinchipe.
These two examples are absolutely crucial to demonstrate the seriousness and reality of the benefits of large-scale mining.
Decree 151 issued by President Lasso last year shows that he has a clear vision for improving mining conditions, implementing measures that improve mining in general in Ecuador and of the attempt to eradicate illegal mining, which has unfortunately been the example seen by the public.
At Cascabel, we will very soon begin the phase of negotiation with the government on the details of royalties and taxes, in compliance with the different stages of the law.
Numerical: Despite government support, many permits are still delayed for various businesses.
Taunton: Although I am sure that there are still permits that are overdue, the current Ministry of the Environment has moved forward with many interrupted procedures.
In our particular case, in Cascabel, we had one that was delayed for at least three years. It was a relief for us to see that the water permits, which were previously blocked, have been brought forward.
Generally speaking, I understand that the goal is to meet appropriate response times, as per regulations.
The issuance of environmental permits has slowed in recent months, but it is clear that the government intends to resolve this problem as soon as possible.
Numerical: How do you see the future of mining in Ecuador?
Taunton: With three, four, five or more mines in production within a four-year time frame, the revenue contribution to each mine’s areas of influence will be demonstrated.
Concerning Cascabel, we speak roughly of a potential of 32 billion dollars of income and on that there is at least 3% of royalties of which 60% could reach the zone of influence.
The numbers are huge compared to provincial and cantonal budgets.
One of the big challenges is that the GAD [local governments] begin to understand how they will be able to access this type of fund, through proposals that are presented to the central government.
Numerical: Cascabel will mark a before and after in mining in Ecuador. How do you see the country’s prospects in the medium and long term?
Taunton: The goal for Ecuador is to let the companies work in the different stages of exploration to find another Cascabel, several Cascabels.
Geologists have no doubt that in Ecuador there is the same mineral wealth as in Peru, for example, hence the importance of exploration with adequate time frames to find the minerals and take it to the next stage. following when technically it should be done and not just to comply with a deadline.
This is how Ecuador can be one of the new major copper producers.
Ecuador has great potential and if the minerals have not been found as in other countries, it is because the investment conditions there have not been adequate.
Now is the time to open up, because mining is a demanding business and it starts with shareholders who expect their money to be used in an environmentally responsible, legal and responsible way. for the benefit of government and communities.
Numerical: Do you think the time is right to open the mining ledger and that there will be enough interest from investors to bet on mining in Ecuador?
Taunton: Since the opening of the cadastre was mentioned, many investors have become interested.
I believe that the cadastre must be opened very soon to satisfy the interest of third parties.
Ecuador needs foreign investment because without it it cannot develop projects. Ecuador has no money, so it must take advantage of the interest of foreign investors who now see the country in a positive light.
The opening of the cadastre is a crucial element.