INV Metals revises feasibility study on Loma Larga in Ecuador

INV Metals (TSX: INV) moved into Ecuador seven years ago when it acquired a 100% interest in the Quimsacocha concession from Iamgold (IMG: TSX) in an all-share deal valued at US$30 million.

Since then, INV changed the name of the project to Loma Larga and has, slowly but surely, advanced the asset from exploration through to feasibility work.

At the end of March, INV completed an updated feasibility on the high-grade epithermal gold-copper-silver deposit, 30 km southwest of Cuenca, that incorporated the relocation of plant infrastructure and a tailings facility near the proposed mine site, and updated capital and operating costs estimates.

The latest study outlined average production of 203,000 gold-equivalent oz. a year over a 12-year mine life at cash costs of US$559 per oz. and all-in sustaining costs (AISCs) of US$627 per ounce.

The company says it now aims to break ground in 2021 and achieve first gold concentrate production in late 2022.

The mine would produce two concentrates, a gold-copper concentrate and a gold-pyrite concentrate. The gold-pyrite concentrate would provide approximately 75% of anticipated revenue due to its higher gold grade, while the gold-copper concentrate would account for the remaining revenue stream.

The feasibility study estimates that the initial capital required to build the 3,000-tonne per day project would come in at about US$316 million, with an after-tax payback period of just under three years. At a gold price of US$1,400 per oz., the study estimates an after-tax net present value at a 5% discount rate of US$454 million and an after-tax internal rate of return of 28.3%.

Proven and probable reserves stand at 13.9 million tonnes averaging 4.91 grams gold per tonne, 29.6 grams silver per tonne and 0.29% copper (5.72 grams per tonne gold equivalent).

“We are very pleased with the positive economics of the feasibility study,” Candace MacGibbon, INV’s CEO, told The Northern Miner. “Our focus in 2020 is to continue to advance project financing and the environmental permitting process with the goal of obtaining the required significant permits for development. We continue to remain excited about the federal government’s commitment to and support of mining and believe it will emerge as a leader in the development of responsible mining.”

While the Loma Larga mine has support from the federal government, local businesses and many local residents, the company says, there has been some opposition to its development.

In February 2019, the Ecuadorian National Electoral Council called for a referendum regarding the potential impact from INV’s proposed mining activities based upon submissions by the Community Water Systems Union in Girón Canton, one of three cantons where the project is situated.

Even though the deposit was not in Girón Canton, the processing and tailings facilities would be located there, and, to complicate matters further, a second application for a referendum against proposed mining activities within the Province of Azuay was also submitted.

INV Metals’ Loma Larga gold project in Ecuador. Photo by Trish Saywell.

The Ecuadorian Ministry of Energy and Nonrenewable Resources submitted a Constitutional Precautionary Measure indicating the state ministry considered the referendum proposed by the Ecuadorian National Electoral Council to be unconstitutional, as it violated the constitutional rights of the State Ministry to oversee mining activities.

In September 2019, Ecuador’s Constitutional considered the application to hold a proposed referendum related to mining activities within the Province of Azuay, as well as an application in the canton of Camilo Ponce Enriquez, and denied the applications, stating neither met the required criteria to proceed.

At that point, the company decided to relocate the plant infrastructure and a tailings facility on the same concessions as the proposed mine site and update the 2018 feasibility study.

“The Provincial Premier is anti-mining and tried to use the referendum system in our province to promote an anti-mining platform, but he was unsuccessful, and the constitutional courts upheld our rights,” MacGibbon said in a town hall webinar on April 28. “We will continue to have opposition to mining, but to combat this we will ensure that our communities are very well informed. Going forward we will use social media to get our message out, indicating who we are and what our core values are and the benefits for the local and regional areas.”

Looking ahead, MacGibbon added in an interview, the company is “committed to executing the development of Loma Larga in a socially responsible and environmentally sustainable manner working together with our stakeholders to unlock the significant benefits that will accrue to the local communities and governments in the form of taxes, programs and employment and procurement opportunities.”

INV is now working to complete the environmental impact statement (EIS) process, increase the company’s consultation and communications efforts informing local residents of the benefits mining provides, and advancing several environmental, social and governance (ESG) initiatives.

But based on INV’s discussions with its consultants in Ecuador and talks with the Ministry of the Environment, MacGibbon says, INV expects to complete the EIS process by the end of the second quarter of this year and hopes to have final permits in place by the end of the first quarter of 2021.

If all goes well, construction of the access ramp, portal and processing plant will follow with commissioning slated for the second half of 2022, she says.

INV also says that abundant exploration potential remains at Loma Larga and elsewhere in the country. Along with the inferred resources of 24.1 million tonnes averaging 3.76 grams per tonne gold, 24.8 grams per tonne silver and 0.22% copper (4.36 grams per tonne gold equivalent), the Loma Larga deposit remains open to the east, west, north and at depth.

There is potential for satellite deposits on the 12 km land package, and INV has identified nine priority targets with encouraging hydrothermal alteration and structural data that warrant further investigation.

The company says there is also evidence of a potential porphyry deposit about 1 km to the north of the Loma Larga deposit, where a previous drill hole intersected 622 metres grading 0.20 gram gold per tonne gold and 523 parts per million copper at a depth of 532 metres.

Elsewhere in Loja province in southern Ecuador, INV is working at Tierras Coloradas the second of four concessions the company holds in the country.

The initial exploration activities included mapping, rock chip and channel sampling of five veins with a total strike length of 7 km. The veins are interpreted to be the upper extension of a low sulphidation epithermal quartz vein system.

Sampling returned positive results on all veins, including ten high-grade gold grades within the channel and rock chip sampling program on the Aparecida and Quemada veins, with high grades between 30 grams per tonne gold and 240 grams per tonne gold

INV recently completed a preliminary US$1.5 million drill program and announced results April 22 from the first 10 holes in a 12-hole, 2000 metre program focused on the Aparecida and Quemada veins. All the drill holes hit vein material with one intercept returning 10.94 grams gold per tonne and 34.3 grams silver per tonne over 1.5 metres.

In addition, drilling has confirmed that the veins are continuous and mineralized at depth. INV is now combining the drill hole and geochemical data to guide future drilling towards areas of possible higher-grade mineralization and to identify areas with potential.

Last October, INV completed a $15.6 million private placement and strategic investment with Dundee Precious Metals (TSX: DPM). DPM invested $10 million to acquire a 19.5% interest in INV while Iamgold invested $5.6 million to keep its 35.6% pro-rata interest. With these funds, INV has been able to complete the exploration programs around Loma Larga and at the Tierras Coloradas projects and will further evaluate exploration activities. The company remains well funded to complete the EIS and permitting activities at Loma Larga.

Over the last year, INV has traded within a range of 18¢ and 48¢ and at press time in Toronto was trading at 32¢. The company has about 136 million common shares outstanding for a market cap of about $44 million.