RE: From Yesterday11 Dec 2019 09:02
For Mather, transitioning from a junior explorer with no mine building experience into a large-scale miner via the financing and development of a multi-billion dollar blockcave mining operation seems to be the most natural thing in the world. So far, there has been little evidence to shake the faith in that possibility.
Next year is likely to be the defining year for SolGold and Cascabel with a pre-feasibility study due, as well as negotiation of an investment agreement with the government and concluding concentrate offtake agreements, as well as another funding round. Prior to these, the company aims to publish an updated mineral resource estimate before year
The successful development of Lundin Gold’s Fruta del Norte gold project, which has just entered into production, will smooth some of the turbulence that the company might otherwise have faced, principally as it established a pathway to negotiating investment agreements with the government.
SolGold is currently completing the economic impact assessment for Alpala, supported by Wood Mackenzie, to gain insights on how the development of Alpala will benefit Ecuadorian stakeholders, Mather told Mining Journal, on the conclusions from our preliminary economic assessment, this will look at the economic outlook of the country, the drivers of exports, direct and indirect employment gains linked to our project, the tax take for local and central governments via royalties and direct and indirect taxes, as well as intangible benefits from initiatives that SolGold has put in place to assist small business development opportunities, and improve the skills base for the surrounding populace.
We expect the output from this study to form the basis for a fiscal model on which SolGold and the government can begin informed discussions on Alpala.
Lundin Gold has an investment agreement in place which established a framework for such negotiations, though a final agreement will need to accommodate the benefits that are forthcoming from larger projects such as Alpala.
Wood Mackenzie has many years experience advising the government in Ecuador, particularly on the fiscal regime for the mining and petroleum sectors. It was also instrumental in the FDN contract negotiation, creating the mechanism used for the controversial sovereign adjustment and now defunct windfall tax.
SolGold is getting a jump start to the concentrate contract negotiation process, getting the ball rolling at the LME (London Metals Exchange) Week in late October, with Hofmaier bullish that the company has an advantageous bargaining position given Freeport-McMoRan will begin construction of a copper smelter at its Grasberg mine in Indonesia in 2020, which will limit concentrate exports post 2023.
Alpala will produce an exceptionally clean concentrate, highly attractive to most western smelters as a replacement for production from Freeport’s giant Grasberg mine Hofmaier said.
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