Dundee gets OK for Ecuador gold project

Dundee Precious Metals (TSX: DPM) has the full go-ahead to proceed with its Loma Larga underground gold project after the government of Ecuador granted the company its environmental licence for exploitation.

The licence allows Dundee, which acquired the project four years ago and has updated a feasibility study for release soon, to expand from two mines in Europe to the South American country.  Ecuador opened its mining registry last month for the first time in seven years and promised to streamline approvals. 

The project has previously received pushback from non-government organizations and local agencies for its potential impact on the local water supply and ecosystem. The Azuay provincial court had sided with the company provided that it consulted with Indigenous communities.

The company is “designing and advancing Loma Larga in line with the highest standards for environmental and water management,” Dundee Precious Metals CEO David Rae said in a release on Monday. 

Shares of Dundee Precious Metals gained 2.8% to close at $22.27 apiece on Monday in Toronto for a market capitalization of $3.72 billion.

‘Rigorous process’

The Toronto-based Dundee said the Ministry of Environment, Water and Ecological Transition issued the licence on June 23 following a “rigorous process” by the Ecuadorian government.

The granting of the licence follows the company’s successful completion of an indigenous consultation process this year, as well as its fulfilment of the August 2023 ruling by the provincial court of Azuay.

Dundee, which operates two producing mines in Europe after completing its recently announced acquisition of Adriatic Metals, considers Loma Larga to be a “high-quality underground development project.” It shares similar geology, mining method and a processing flowsheet to its Chelopech copper-gold mine in Bulgaria, the company said. 

A 2021 feasibility study indicated that Loma Larga has the potential to produce an annual average of 170,000 oz. of gold during an estimated 12-year life. The production is based on an estimated mineral reserve totalling 13.9 million tonnes grading 4.91 grams gold per tonne for 2.2 million oz. of contained gold.