Ecuador is on the verge of a mine-building surge, as President Daniel Noboa’s reelection coincides with high metals prices and a handful of projects ready for development.
He will start his second term on May 24 on the brink of a mining bonanza, with six projects at the development stage representing at least US$10 billion in investment slated for construction decisions during the 2025-2029 presidential term.
During his current term, truncated to about 18 months as he is completing the term of the previous incumbent, Guillermo Lasso, Noboa has been an advocate of growing Ecuador’s mining sector to boost employment, public coffers and diversify the economy. The country’s needs are many and Noboa recognizes that Ecuador needs the investment and wealth generation that mining can bring.
In a busy 18 months, his administration has overseen projects obtaining permits and signed tax stability agreements with several companies. It has also successfully negotiated a free trade agreement (“FTA”) with Canada, which includes an investment chapter, although without a mining-specific chapter.
Of particular note is that Noboa won in the mining provinces of Azuay, Bolivar, Cotopaxi, El Oro, Esmeraldas, Imbabura, Morona Santiago and Loja.
The positive scenario in Ecuador was quickly recognized by China’s mining giant CMOC (~US$21 billion market cap), which agreed to buy gold-copper developer Lumina Gold for C$581 million at a 71% premium in April for its Cangrejos deposit. China’s Jiangxi Copper also increased its investment into another Ecuador copper-gold developer, Solgold, becoming its largest shareholder with a 12% stake.
International lending agencies such as the World Bank (“WB”) and the International Monetary Fund (“IMF”) are keen for Ecuador to develop its natural resources and presumably be less dependent on loans. “WB and IMF both recently said that Ecuador should drive mining development,” Maria Eulalia Silva, president of Ecuador’s Mining Chamber said recently.
Silva said that Ecuador is no longer naïve when it comes to mining and the people can draw on the positive experience the country has had through the successful developments of Lundin Gold’s Fruta del Norte gold mine and Ecuacorriente’s Mirador copper mine, which both started production in 2019. The development of these two mines have seen Ecuador’s mining exports soar to become its fourth largest export, accelerating from US$275 million in 2018 to US$3.3B in 2023. Higher metal prices and more projects will see these continue to climb.
Silvercorp’s El Domo Project
Leading the charge to develop Ecuador’s next mine is Silvercorp Metals Inc. (TSX: SVM) (NYSE-A: SVM), whose El Domo project, which it will develop with local partner Salazar Resources (TSX.V: SRL), is poised to become Ecuador’s first new mine in nearly a decade. This was one of the projects that received its final permits from the Noboa administration in 2024, with the partners aiming to bring it into production by the end of 2026.
Located 150 km northeast of Guayaquil, the US$241-million development has a 2021 feasibility study that outlined a 10-year operation to produce an annual average of 24Mlb of copper, 26,000oz of gold, 26Mlb of zinc, 488,000oz of silver and 0.9Mlb of lead at an all-in sustaining cost of US$1.26/lb of copper equivalent.
El Domo, which was discovered by Salazar in 2008, hosts proven and probable reserves of 6.5 million tonnes grading 1.93% copper, 2.52g/t of gold, 2.49% zinc, 45.7g/t of silver and 0.25% lead, which makes it among the highest-grade copper-gold projects globally.
El Domo mine construction is fully financed through a US$175.5-million streaming deal that the previous owner, Adventus Mining, secured from Wheaton Precious Metals (TSX: WPM) (NYSE: WPM) (LSE: WPM), along with Silvercorp’s strong balance sheet, which has US$355 million in cash as of December 31, 2024.
Silvercorp, a proven mine builder and operator with a track record of success in China developing and operating low-cost mines, is now applying the same disciplined capital allocation, results-driven approach to the El Domo Project. In April, the company announced the budget for El Domo’s development of US$240.5 million, 3% below the US$247.6 million estimate in the 2021 feasibility, at a time when developers are battling inflation. The cost reduction stems from mine design optimization, lower equipment costs, and a unit-cost contract bidding strategy, resulting in US$32.6 million in direct cost saving. The latest budget also includes a larger contingency of US$31.9 million, up from US$22.0 million, providing additional flexibility.
Silvercorp’s ability to execute efficiently is not theoretical, it has already delivered. At one of its operations in China, the company completed a new tailings storage facility for just US$28 million, coming in well below the original $38 million budget. Silvercorp has also successfully carried out a mill expansion of comparable scale to El Domo on time and under budget. These accomplishments reflect a repeatable, disciplined execution model that Silvercorp is now bringing to Ecuador.
Construction is now underway with pit stripping and plant construction scheduled to commence in Q3 2025, and commissioning targeted in December 2026. Silvercorp has advanced detailed engineering for the tailings storage facility (“TSF”), saprolite waste dump, and water management system, and optimized designs for the open pit mine and process plant, and site access. It has also secured grid power through a powerline contract with the state-owned power company CNEL and is advancing on permitting and sourcing for standby diesel power generators for the dry season, when hydropower will be less available.
With work well underway and momentum building, Silvercorp is positioned to move rapidly through the development process to bring Ecuador’s next mine into production early in President Noboa’s second term at a time when the country needs mining most.
For more information about Silvercorp Metals, please visit silvercorpmetals.com/welcome.
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