Source: Luminex Resources

In a significant development for Ecuador’s mining industry, Canadian junior Adventus Mining (TSXV:ADZN) (OTCQX:ADVZF) is set to acquire Luminex Resources (TSXV:LR) (OTCQX:LUMIF), forming a new entity focused on copper-gold development in Ecuador. The transaction, structured as a merger, entails Adventus Mining absorbing Luminex, with Luminex shareholders receiving 0.67 of an Adventus share for each share they hold. This move is expected to consolidate the two companies’ strengths, leading to a more robust presence in the South American mining landscape.

Adventus chief executive Christian Kargl-Simard commented in a press release: “For Adventus shareholders, the new capital and acquisition of Luminex’s Condor project and other properties allows the creation of a stronger and more diversified company with one of the largest copper-gold exploration portfolios in Ecuador.”

The newly formed company, which will continue to operate under the Adventus name and ticker, will focus on advancing two primary projects in Ecuador. The El Domo-Curipamba copper-gold deposit, currently at the feasibility stage, is recognized for its high copper-gold grades and low capital intensity. It has garnered interest from the Ecuadorian government and is undergoing environmental consultations, with a construction decision anticipated in the first half of 2024. The other key project is the Condor gold project, in the preliminary economic assessment (PEA) stage. Located in southeastern Ecuador, near the Fruta del Norte mine and the El Mirador copper mine, the Condor project’s preliminary economic assessment, completed in 2021, predicts a 12-year operation producing 187,000 ounces of gold annually.

The merger will create a company with one of the largest exploration portfolios in Ecuador, encompassing over 135,000 hectares across 13 projects. This expansion reflects a strategic move to consolidate a significant presence in a country rich in mining potential.

The business combination has garnered support from influential figures in the mining sector, including geologist and entrepreneur Ross Beaty’s Lumina Group, local Ecuadorian investors, and strategic equity investors like Altius Minerals and Wheaton Precious Metals. Post-transaction, Adventus shareholders are set to own 61% of the new entity, with Luminex shareholders owning the remaining 39%. Ross Beaty is expected to be the sole shareholder with more than 10% of the issued and outstanding shares. Concurrent with the transaction, the companies announced a financing round of approximately $17.1 million, with participation from Beaty and Wheaton.

Mining is a significant contributor to Ecuador’s economy, ranking as the fourth-largest source of income last year, following oil, bananas, and shrimp, and contributing $2.8 billion to the state’s coffers. However, the sector faces challenges, including growing opposition to extractive activities. According to the country’s Chamber of Mining, this opposition is impeding nearly $1 billion in potential investment and delaying about 100 projects over the next two years. Despite these challenges, projects like SolGold’s (LON: SOLG) Cascabel copper-gold project, which recently received a 25-year license renewal, demonstrate the ongoing potential and interest in Ecuador’s mining sector.

This merger between Adventus and Luminex represents a strategic consolidation in the industry, aiming to leverage the strengths of both companies to advance copper-gold mining projects in Ecuador, a region with significant untapped potential.

 

 

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.

Ecuador has become one of the most attractive countries for mining investments in Latin America, with a favourable investment climate, attractive legal and tax frameworks, and a wide variety of mineral deposits. With this in mind, here are some of the mining companies in Ecuador to watch in 2023.

Solaris Resources (TSX:SLS) (OTCQB:SLSSF)

Solaris Resources is a junior mining company based in Canada, with its flagship Warintza Project located in southeastern Ecuador. The company has enjoyed multiple successful discoveries at the Warintza Project while building a positive relationship with the government and signing an important investment contract protecting the project.

On December 22, 2022, Solaris and the government of Ecuador signed an investment contract ratifying the Investment Protection Agreement announced on June 9, 2022. The important contract marked a major milestone for the company and displays how important the project is to the country. Some of the highlights of the agreement surrounding protections and incentives for the duration of the title of the Project which extends with renewal to 2066 are as follows:

  • Security of investment
  • Stability of mining law
  • Stability of taxes at a reduced income tax rate of 20% (25% previously)  
  • Exemption from capital outflow tax (5% previously)
  • Exemption from import duties (up to 5% previously)
  • Detailed procedures for dispute resolution and international arbitration protection

Solaris also recently announced results from metallurgical test work at the project conducted by FLSmidth USA with high recoveries of over 90% copper and 80% molybdenum. The test work revealed and confirmed that the project holds further potential for high-grade copper discoveries and more. 

Luminex Resources (TSXV:LR)

Luminex Resources recently reported new drill results from its Condor copper-gold project in Ecuador. Drilling confirmed a strike length of 350 metres, and the anomaly has now been mapped at surface for more than 500 metres at the Cuyes West step-out holes. 

Highlights from the results are as follows:

  • CU22-12 – 2.5 metres grading 18.54 g/t Au Eq
  • CU22-13 – 36.0 metres grading 2.29 g/t Au Eq
  • CU22-14 – 4.0 metres grading 19.35 g/t Au Eq; including 2.0 metres grading 36.59 g/t Au Eq
  • CU22-15 – 17.5 metres grading 3.07 g/t Au Eq

Lundin Gold (TSX:LUG) 

Lundin Gold’s Fruta Del Norte mine in southeast Ecuador has also seen results from ongoing drilling. The company reported results from the 2022 near-mine expiration program identifying new zones of mineralization to the south and at depth of FDN’s currently defined Mineral Resources. 

Highlights from the results are as follows:

  • Drillhole FDN2022-009 intersected 5.11 g/t Au over 30.3m from a depth of 267.7m, including;
  • 9.79 g/t Au over 14.0m from 284.0m
  • Drillhole FDN2022-006 intersected 3.99 g/t Au over 4.8m from 181.7m, and 4.40 g/t Au over 8.1m from 213.9m

Highlights from holes drilled under the southern portion of the FDN mineral resource envelope:

  • Drillhole UGE-DD-22-008 intersected 4.11 g/t Au over 23.0m from 197.7m, including;
  • 6.03 g/t Au over 10.0m from 202.7m
  • Drillhole UGE-DD-22-005 intersected 3.53 g/t Au over 44.9m from 134.8m, including;
  • 5.25 g/t Au over 12.9m from 134.8m, and;
  • 4.32 g/t Au over 15.0m from 164.7m

 

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.

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