Ecuador is Green, and Gold!
Risk to Reward Lucky Minerals (LKY.V) is beginning to look….Lucky!
As gold climbs and mainstream news starts to pay attention mining stocks start becoming attractive and this could launch the sector into the positive cycle it has deserved. One of the key locations that I favor is a bit of surprise because it is just as much a play on politics as any other factor. In fact, some might argue there are more political risks then resource/exploration risk. That is Ecuador. This country has incredible resources that have remained untouched but a pro economy government is looking to change that. I wrote a piece entitled The Republic of the Equator that is worth reading that provides some insights on the investment potential of Ecuador. Over the past days a couple of outstanding reports about Ecuador have come out from Reuters.
The first is Australian company Solgold’s Cascabel project in northern Ecuador, which has been on a stock market tear released its preliminary study showing it could be one of the world largest copper, silver and gold mines. In fact, Carlos Pérez Garcia, Minister of Energy stated that the Cascabel region: could become the largest underground silver mine, third-largest gold and sixth-largest copper in the world. Cascabel has mineral reserves of 10.9 million tonnes of copper and more than 23 million ounces of gold and could function from about 49 to 66 years of underground mining operations.
The second announcement was a follow up by local communities that opposed the initiatives. Local communities are granted the right to petition the Constitutional Court to hold a referendum on disallowing the already permitted properties. President Lenin Moreno warned Court of the optics and consequences of dismissing legally licensed foreign companies. This type of action would close Ecuador to investment and breed incredible distrust.
On the 20th of June Ecuador’s Constitutional Court ruled against a request to require community consultations for a planned mining project, allowing Australia’s SolGold to move forward with developing its Cascabel copper, gold and silver mine. This is incredible news for the country as it tries to develop an economy and a foundation for green/clean tech while diminishing its crude oil exports. It would be insane to ask the country to not produce silver and copper which are critical and abundant in solar panels, power grids, batteries, battery storage, electric vehicles never mind all the electronics we use.
This does not account for new companies that will be bustling to develop properties near Cascabel or Lundin Gold’s awesome Fruta del Norte. These companies have permits. Getting a new permit in Ecuador may prove to be difficult a process for new entries and as gold swells in price and recognition in the mainstream money is going to flow into Ecuador but it will flow to those with early advantage.
There is another Canadian company that has an outstanding position in Ecuador. Lucky Minerals (LKY.V) is close to infrastructure, on a trend line but most important, is already permitted and ramping up exploration, mapping alterations, geomag, and LIDAR. Lucky Minerals closed at $.065 on Friday…$.065. Here is a link to the article I wrote on the company entitled In the Presence of Volcanoes.
Do you think six cents a share on a potential home run swing is attractive?
Securities Disclosure: I, Andrew O’Donnell, have not been remunerated for writing this article.
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