Atico secures $158M protection for Ecuador project

Atico Mining (TSXV: ATY, US-OTC: ATCMF) has inked an investment protection agreement (IPA) with the government of Ecuador for its La Plata mining project as it enters the final stages of permitting. 

The IPA covers a total of $157.9 million (C$218 million) in current and future investments, Atico said Wednesday. The company and the government negotiated the deal during last year’s Prospectors and Developers Association of Canada convention in Toronto. 

Vancouver-headquartered Atico said the agreement would provide the added benefit of legal and tax stability throughout the life of mine, which is 100 km southwest of Quito. Under the terms of the IPA, Atico would receive an income tax reduction of 5% during the life of the contract, access to international arbitration in disputes, and protection from confiscation or expropriation of assets except under strict constitutional conditions with fair compensation.

The IPA “with its robust legal and tax stability provisions” safeguards investments for the La Plata project and “strengthens investor confidence by ensuring a predictable and secure environment,” CEO Fernando Ganoza said in a release.

Final permits

The project, at the last stage of obtaining its environmental license and other permits, is expected to produce 10 million lb. copper, 13 million lb. zinc, 16,000 oz. gold and 227,000 oz. silver a year after initial capital spending of 91 million, according to a company presentation this month.  

Shares of Atico initially gained 3¢ to 25¢ apiece by the close of Thursdays session for a market capitalization of C$45.1 million.

The La Plata property covers two concessions covering a total area of 23 sq. km along its 9-km length. It contains known mineralization in two volcanogenic massive sulphide lenses and nine priority exploration targets.

A 2019 preliminary economic assessment for La Plata showed that the deposit holds 1.9 million tonnes in resources at an average grade of 4.1 grams gold per tonne, 49.4 grams silver, 3.3% copper, 4.5% zinc and 0.6% lead.

Development of La Plata will be supported by cash flow generated by Atico’s El Roble copper-gold mine in Colombia, which has been in operation since 1990.