Ecuador casts doubt on Dundee’s Loma Larga

Ecuador’s President Daniel Noboa has requested further information on DPM Metals’ (TSX: DPM) Loma Larga gold project, handing responsibility for its approval or rejection to authorities in the southern province of Azuay.

The move follows a request from provincial leaders last week that Environment Minister María Luisa Cruz revoke the environmental permit granted in June to DPM, known until last week as Dundee Precious Metals. On Tuesday, residents marched through Cuenca, the provincial capital, protesting against the $419-million project. Demonstrators in the “March for Water” argued the mine would threaten the region’s water supply.

Experts counter that while the concession lies within the El Cajas Massif Biosphere Reserve, the project area is outside the water protection zone established by the environment ministry in 2012. Dundee says it has monitored water in the area for 20 years and plans to recirculate 90% of what it uses.

Noboa has asked provincial authorities to submit technical reports and reasoned administrative resolutions addressing alleged risks of water contamination, local media reported.

DPM shares were down 0.4% to $29.07 apiece on mid-day Wednesday, for a market capitalization of $4.87 billion. The stock has traded in a 12-month range of $12.30 to $30.52.

Historic consultation

DPM acquired the Loma Larga project in 2021. That same year, former presidential candidate Yaku Pérez and allied groups sued, claiming the project violated environmental and human rights. A provincial judge dismissed the allegations but required a free, prior, and informed consultation before production could begin. The Ministry of Energy completed that process in May, marking the first such consultation for a mining project in Ecuador.

The underground mine holds an estimated 926,000 oz. of gold and is projected to produce 200,000 oz. annually during its first five years, before averaging 170,000 oz. over the next seven. The site also contains copper and silver and includes a processing plant and tailings facility.

Observers fear Loma Larga could face the same fate as the Río Blanco gold project, also in Azuay, which was halted by a 2018 court decision and later became a target for illegal mining.

Loma Larga is one of six major projects expected to move into construction or production in Ecuador, alongside SolGold’s (LSE: SOLG) Cascabel, Silvercorp Metals’ (TSX, NYSE: SVM) El Domo, CMOC’s Cangrejos, Atico Mining’s (TSXV: ATY; US-OTC: ATMCF) La Plata and Solaris Resources’ (TSX: SLS; NYSE: SLSR) Warintza. Earlier this month, Dundee expanded its portfolio with a $1.25 billion acquisition of Adriatic Metals, gaining assets in Bosnia and Serbia.