Cangrejos is one of the largest gold deposits in the world. Can you provide an overview of the project?

Cangrejos is the world's 26th largest gold deposit at any stage—exploration, development, or production. It contains 20 million oz of gold across all resource categories, along with 2.6 billion pounds (lb) of copper and a 1:1 silver-to-gold ratio. The deposit was initially discovered in the 1990s by Newmont, but there was no 43-101-compliant resource estimate. In 2023, we released a PFS highlighting an NVP of US$2.2 billion and an IRR at about 17% using conservative reference prices - US$1,650/oz for gold and US$3,75/lb for copper. The initial capital in the 2023 study was estimated at US$925 million for a 30,000 t/d operation. Lumina Gold completed the last financing in 2021, and in 2023, we secured a US$300 million stream with Wheaton Precious Metals that took us through competition of the FS. We drew US$45 out of US$48 million for the FS, with the last US$3 million left for early works, and we will receive an upfront payment of US$252 million during construction.

Are there any major changes you expect in the FS?

To simplify the construction, we decided that, instead of starting at 30,000 t/d operation, we could kick off with 40,000 t/d and then double production in year five. Another change is an important de-risking exercise, whereby we took the first three years of the mine plan in the PFS, drilled it out and converted the resources to measured and proven reserves. In the PFS, we estimated a waste-to-ore ratio of 1.26:1, but in the FS, we expect to reduce this to 1.1:1. 

Cangrejos offers multiple mine-cost advantages, especially in an ANDEAN setting: First, it is low elevation, with the highest point on the property at 1,300 m, whereas the main (Cangrejos) pit where we will be mining for the first 14 years is about 1,100 meters. It also benefits from plenty of water, receiving around 2 m/y of rainfall. From a logistics perspective, we are 40 km away from Puerto Bolivar, which also ships Mirador’s concentrates, and just 20 km away from the Avanzada power substation. We also have a good paved road access into the area. The other advantage is that the project has a low stripping ratio, with significant outcroppings at surface. All of these help drive the economics of a lower-grade porphyry-type deposit.

We also opted for a dry stack tailings system, especially because we are in a seismic area and a traditional rock-filled dam could prove risky for the communities downstream in the event of an earthquake. 85% of the water in the tailings is recycled and pumped back to the plant.

What are the advantages of a stream versus other traditional forms of financing? 

The deal with Wheaton Precious Metals provided us with US$300 million for a 6.6% stream on gold production, at a total cost of capital of about 8%, which is a lot better than going out to the markets in a downturn market and diluting our value. The deal also gave us a third-party validation beyond the work we are doing with our consultants.

How prepared is the market to fund such a large project in an emerging jurisdiction like Ecuador?

Ecuador went from no major mines to two large developments - the Fruta del Norte gold mine of Lundin Gold and the Mirador copper mine owned by Ecuacorriente – in 10 years. Successfully financed, permitted and commissioned, these projects were trailblazers for mining in the country. Ecuador is becoming increasingly competitive, promising a high discovery potential since the country has not been systematically explored like Peru or Chile.

Could you also comment on other de-risking works, including permitting and investment protection agreements?

We negotiated the investment protection terms and ended up with formal documentation that fixes the term sheet for the royalties – 6% NSR on gold and 4% NSR on copper – at today’s gold prices. Once we deliver the environmental license, we will sign the final investment protection agreement. The environmental impact statement (EIS) is underway; the full study will be submitted to the Ministry of Environment by around mid-year and will be followed by two public hearings.