Key Points
- Lumina secures a $25 million royalty deal.
- Project aims for 469,000 gold-equivalent ounces annually.
- Cangrejos ranks among top undeveloped gold assets.
The Cangrejos gold-copper project in Ecuador has been granted an exploitation permit by Lumina Gold Corp. (TSXV: LUM), allowing the project to proceed towards a feasibility study in the middle of 2025.
Lumina secures exploitation permits with favorable terms.
As part of the agreement, the Ecuadorian government would receive $25 million in advance royalties in four installments. For gold valued under $2,225 per ounce, royalties will be 3%; for gold priced beyond $3,225 per ounce, they will increase to 8%. Over a 26-year mine life, 469,000 gold-equivalent ounces per year are anticipated to be produced by the $925 million capital expenditure project.
Kerry Smith, an analyst at Haywood Securities, stated that Lumina’s royalty conditions are “slightly better” than anticipated and more advantageous than those of competitors such as SolGold (LSE: SOLG; TSX: SOLG).
Wheaton Precious Metals (TSX: WPM; NYSE: WPM; LSE: WPM) is providing money for a feasibility study that is de-risking the Cangrejos project.
Another $6 million in funding will become available after the exploitation contract is finalised. Selling the project to a well-funded copper or gold company is the long-term objective, according to Smith.
Cangrejos is one of the top 26 undeveloped gold assets in the world, according to the Vancouver-based company. A larger, rebuilt factory that will boost throughput to 40,000 tonnes per day—up from 30,000 tonnes in the 2023 prefeasibility study—was already the result of the feasibility study, which was started in January.
Feasibility study progresses as development accelerates.
Marshall Koval, the CEO, described the permit as a major turning point for Ecuador and the project. In a statement released on November 26, Koval stated, “The royalty terms align with our pre-feasibility study and strengthen the project’s economics as we prepare for the next phase.”
While operations at the neighboring Gran Bestia mine will be postponed, the new mining plan will give priority to higher-grade ore from the Cangrejos deposit.
According to northern miner, at 0.55 grammes of gold per tonne, 0.1% copper, and 0.69 grammes of silver, Cangrejos has 659 million tonnes of probable reserves.
This amounts to 11.6 million ounces of gold, 1.4 billion pounds of copper, and 14.4 million ounces of silver. One billion tonnes of the estimated resource contain 3.7 million ounces of gold, 483 million pounds of copper, and 7 million ounces of silver, with 0.48 grammes of gold, 0.09% copper, and 0.7 grammes of silver.
Under Ecuador’s investment protection mechanism, which ensures investors receive compensation in the event of expropriation, policy changes, or unanticipated calamities, Lumina has committed $721 million for construction and preproduction between 2025 and 2031. Investments over this threshold can also be protected.
