On the heels of closing its Toachi Mining Inc. acquisition, Atico Mining Corp. could start building a second mine in Latin America in about two years, the copper-gold miner's CEO Fernando Ganoza said in an interview with S&P Global Market Intelligence, a move he said could more than double the company's revenues.
Atico recently bought Toachi for its La Plata gold-copper-silver-lead-zinc project in Ecuador that will expand the company's mining footprint beyond Colombia, where it owns and operates the modest-sized El Roble copper-gold mine.
"The trick there are the permits," Ganoza said in reference to La Plata, basing his two-year estimate for a possible construction decision on conversations with Ecuadorian officials.
Ganoza cited a regulatory environment in Ecuador that he says has become more predictable in recent years as a key reason for pulling the trigger on the acquisition. In the past decade, Ecuador has had a tumultuous relationship with the mining sector. Kinross Gold Corp. sold the Fruta del Norte gold project in 2014 to Lundin Gold Inc. amid concerns about taxation.
But Ganoza said that since the "Kinross disaster" Ecuador has become more open to mining and that foreign investment has increased. Exploration firms working in Ecuador continue to attract capital, especially from Australia, he said, and meanwhile Lundin Gold approaches its first gold pour at Fruta del Norte.
In the near term Atico plans to produce a feasibility study of La Plata after it upgrades resources to the measured and indicated categories, Ganoza said. The project hosts 1.8 million tonnes in inferred resources grading 12.9 g/t gold equivalent at a 4 g/t gold-equivalent cut-off grade. Ganoza expects the resource to grow, saying Atico will chase known extensions to the deposit as it infill drills the existing resource.
If Atico gets La Plata up and running, revenues could more than double to between US$120 to US$140 million depending on metal prices, Ganoza noted. Atico reported US$54.6 million in 2018 revenues.
The project has received broad support from nearby communities, but faces some opposition by sugarcane farmers, Ganoza said. The farmers have raised concerns about the potential mining impact on water, which Ganoza called "illogical" given the farms are at higher altitudes than the project.
He also said the farmers are worried about a changing labor pool should higher-wage mining jobs come to the region. "The sugarcane farmers are used to very low wages, no social security, no safety standards," he said. A mine could increase wages, and standards, making it harder for them to compete for unskilled labor.
"That's a legitimate concern for them," he said.
But he expects they will eventually come aboard with a mine development. "I believe once they realize this is going to happen, they're going to start working with us," he said, noting the mine could bring the farmers other business opportunities.
