One of the five so-called strategic mining projects of Ecuador – Loma Larga – has received a positive feasibility study and is now on the path to accelerated development, with project developer IVN Metals aiming to break ground in early 2020.
The feasibility study calculated, on an after-tax basis, an internal rate of return of 24.7% and a net present value of $621-million, with a payback period of 2.6 years.
The study confirmed the viability of the gold/copper/silver project, which is intended as a 3 000 t/d operation initially, focusing on the high-grade areas and producing 267 000 oz/y of gold in the first four years.
Total production in a mine life of 12 years will be 2.6-million ounces of gold equivalent, at a cash cost of $540/oz, an all-in sustaining cost of $609/oz and an all-in cost of $768/oz.
The initial preproduction capital expenditure is estimated to be $279-million.
IVN Metals CEO Candace MacGibbon said in a statement that the company had received indicative terms from various smelters that demonstrated strong interest for the purchase of both the concentrates that the Loma Larga mine would produce.
“Loma Larga is a relatively simple mining project that we are committed to executing in a socially responsible and environmentally sustainable manner. The underground mine and related processing infrastructure have been designed to have a very minimal footprint, with an estimated disturbance area of less than 80 ha at the project site. The process plant design, the use of paste backfill, and a filtered tailings disposal method will serve to minimise the use of surface water and reduce treated water discharge.”
Ecuador is attracting interest among foreign mining companies as a low-risk, high reward market, where government is supportive of mining, despite a referendum earlier this year restricting mining in protected areas.
The country’s government has identified five projects as strategic, including Loma Larga. The others are Chinese firm Tonglin Non Ferrous Metals Group’s Mirador and San Carlos copper projects, Ecuadorian firm Junefield’s Rio Blanco gold project and Canadian junior Lundin Gold’s Fruta del Norte.
These strategic projects all qualify for additional government emphasis and support.
Over the past year, major foreign miners, including BHP Billiton, Codelco, Newcrest and Anglo American, have all announced plans to invest in the South American country.
IVN believes that the Loma Larga project would be the next large-scale mining development to be financed and permitted in the country, following up on the success of the $684-million Fruta del Norte project, which broke ground last year and is steaming ahead to first production by late next year.
IVN is aiming to produce first concentrate from Loma Larga in late 2021.
The project has an estimated mineral resource of 19.8-million tonnes at 4.25 g/t gold, 27.8 g/t silver and 0.25% copper, containing 3.2-million gold equivalent ounces, comprising 2.7-million ounces of gold, 17.7-million ounces of silver and 109.5-million pounds of copper.
During construction, Loma Larga will employ 875 people and once in production, about 450 people.