SolGold says Ecuador is a strong exploration and mining destination

Australian gold and copper miner SolGold said Ecuador was becoming a strong exploration and mining destination due to recent developments at other mining companies in the region.

Miner Lundin Gold agreed terms on an investment protection agreement for the Fruta del Norte mining project with the Ecuadorean government, just seven months after its exploitation agreement completed, as Odin Mining revealed plans to merge with Ecuador Gold and Copper.

SolGold's chief executive Nick Mather, said: “These developments are a strong endorsement of Ecuador as an exploration and mining destination by both government and industry. Both Lundin and Odin are headed by resource industry executives with strong track records in exploration development and finance. It's pleasing to see."

The company said that Lundin Gold’s investment protection agreement provides further tax stability in conjunction with the exploitation agreement and existing laws in Ecuador.

Lundin’s chief executive, Ron Hochstein said the company continues to enjoy the continued support the Ecuadorian government and local communities and rated the legal stability and economic certainty due to the investment protection agreement.

The investment protection agreement includes a fixed tax rate at 22%, income tax rate also fixed at 22% and exemption from the capital outflow tax of 5% on payments of principal and interest to financial institutions outside of Ecuador. In light of developments in Ecuador, SolGold raised $21.5m financing, which is expected to close on 24 August. Canadian investment and merchant bank Maxit Capital agreed to subscribe for 268.8m ordinary shares at 0.08 cents per ordinary share for gross proceeds of about $21.5m. Plus there is an option for up to a further $15m shares.

SolGold’s Cascabel project has 14 targets with copper gold porphyry characteristics. Only one of the targets, Alpala, has been drilled so far with 23,700 metres of core over 18 holes.

Mather added: "Intense interest in the project by major companies provides the SolGold board and management with confidence that this project is of global significance.”

Shares in FTSE 100 listed SolGold were down 0.73% to 6.82p at 0841 BST.