The government of Ecuador is taking steps to enhance the country’s attractiveness as a mining exploration destination by implementing new measures and addressing tax-related concerns that have previously hindered its potential. The Ministry of Mining is focusing on five strategic projects, with Fruta del Norte (FDN) standing out as one of the largest and highest-grade undeveloped gold projects globally.

On October 21st, Canadian company Lundin Gold acquired FDN from Kinross for $240 million. The sale was contingent upon the government of Ecuador granting certain approvals, which have been provided. Prior to the acquisition, approximately $279 million had been invested in exploration and development, including extensive drilling of over 150 kilometers. The spending breakdown includes approximately 30% on exploration, 32% on mine and project infrastructure, and 38% on general operating costs, studies, and other expenditures.

FDN was discovered in 2006 and boasts an indicated mineral resource of approximately 23.5 million tonnes, with an average grade of 9.59g/t Au, containing 7.26 million ounces of gold and 9.73 million ounces of silver. It also holds an inferred mineral resource of approximately 14.5 million tonnes, with an average grade of 5.46 g/t Au, containing 2.55 million ounces of gold. The project encompasses 36 mining concessions in Ecuador’s Cóndor mountain range, primarily in the province of Zamora-Chinchipe, with some extending into Morona-Santiago province. The total area covered is around 86,000 hectares.

Ecuador is considered a largely underexplored mining country, and its mining laws are still in the early stages. The establishment of the Ministry of Mining in February 2015 reflects the country’s commitment to developing its mining sector. Lundin Gold recognizes the significant opportunities that Ecuador presents due to its underexplored nature and sees the presence of foreign companies as crucial for knowledge transfer and unlocking the country’s true potential.

Negotiations between Lundin Gold and the Government of Ecuador began in June 2015, aiming to settle the Exploitation and Investment Protection Agreements’ key terms and conditions by the end of that year. Field programs, including extensive diamond drilling and environmental baseline work, were also nearing completion in support of Environmental Impact Assessment (EIA) submissions. The company plans to conduct engineering and technical studies, secure environmental permitting, complete a feasibility study, and make a production decision for FDN by mid-2016. Additionally, Lundin Gold may carry out regional exploration on its vast land position in Ecuador.

Minister of Mining, Javier Córdova, estimates that the country has a mining potential worth $200 billion, though this figure could be higher due to the underexplored nature of the country. He also projects that Ecuador’s mining industry could attract over $8 billion in foreign direct investment (FDI) by 2025, leading to approximately $4 billion in exports and direct tax revenues between $800 and $900 million. Meanwhile, Lundin Gold has already invested over $280 million in the country and has created employment opportunities with the hiring of 170 people for the project in the first five months of 2015.

Ecuador’s government initiatives and the involvement of foreign companies like Lundin Gold are set to unlock the country’s mining potential. With projects like Fruta del Norte and estimated billions in FDI, Ecuador’s mining sector holds significant promise for economic growth, job creation, and responsible mining practices. The country’s underexplored territories and favorable investment conditions make it an enticing destination for mining companies aiming to tap into its vast mineral resources.