Solaris Resources (TSX:SLS) has announced an agreement with the Government of Ecuador that will secure the stability of its Warintza Project in southeastern Ecuador. The company has signed an Investment Protection Agreement that provides a foundation of certainty for the legal framework governing the Warintza Project. The agreement outlines further affirmation of stable mining regulations, security of title, and investment for the term of the agreement, on top of significant new tax incentives to accelerate development at the project.
Highlights from the agreement:
- The IPA provides a foundation of certainty with respect to the legal framework governing the Project, including stable mining regulations, security of title and investment, and new tax incentives to accelerate development
- 5% reduction of income tax, fixing the income tax rate at 20% (applicable to SLS), exemption from capital outflow tax, and exemption of all import duties for the import of goods needed for new investments
- Specific protections relate to the prohibition of all forms of confiscation, non-discriminatory treatment and equal playing field, legal security, tax stability and international arbitration
- IPA signing ceremony to take place with the Warints and Yawi communities at the Project in July. SLS recently amended its Impact and Benefits Agreement with these communities reaffirming their support for the responsible advancement of Warintza
Ms. Lorena Konanz, Vice Minister of Export and Investment Promotion of the Government of Ecuador, stated, “From day one, our administration has been focused on encouraging sustainable and transparent economic growth in Ecuador with incentives to facilitate major investments in the country. In the mining sector, our most important goal is to ensure that development is responsible, environmentally friendly, and socially-committed, as at the Warintza Project.”
Mr. Vicente Tsakimp, Coordinator of the Warintza Project Strategic Alliance, stated, “We are excited to be part of the successful advancement of Warintza and show the industry that it is possible to develop a mining project in a responsible and inclusive way. The people of Warints and Yawi welcome President Lasso’s approach which promotes the development of remote communities as this has had a direct impact on our families’ economy, living conditions and opportunities.”
Mr. Daniel Earle, President & CEO, commented, “President Lasso´s administration continues to take consequential action to accelerate the development of the formal mining sector in Ecuador. Its positive approach of regulatory reform and meaningful tax relief focused on major new projects like Warintza, which embrace responsible approaches to community development and environmental protection, will pay great dividends to the people of Ecuador for generations to come. We are humbled to operate in service of its vision.”
The agreement will include a 5% income tax reduction, fixing the total income tax rate applicable to Solaris Resources at 20%. There will also be an exemption from the capital outflow tax and all import duties for any import of goods needed for new investments in the Warintza project. The signing ceremony for the agreement will take place with the participation of the Warints and Yawi communities, two important community partners for the Warintza Project and Solaris, in the village of Warintza sometime in July 2022.
The other notable parts of the agreement are the specific protections related to the prohibition of all forms of confiscation, non-discriminatory treatment and equal playing field, legal security, tax stability, and international arbitration if there are any disputes about the Warintza Project. With countries like Peru experiencing upheaval in the mining industry and nationalization of resources and projects in Mexico, Ecuador and the communities of Warints and Yawi have shown that collaborative, collective work is not only possible, but the most beneficial form of business for all stakeholders.