Canada’s Salazar Resources (TSX-V: SRL) and Adventus Mining are set to ink a final a foreign direct investment agreement with Ecuador’s government for their El Domo copper and gold project.
The partners said that the country’s investment institution approved last week a draft contract whose final version is expected to be signed in four months.
The investment agreement includes a number of incentives for the miners, which are valid for about 10 years, until March 2033.
These include a 5% reduction in the income tax rate to 20% and a full exemption on capital outflow tax (ISD) on all imports of capital goods and raw materials.
The deal also grants Adventus Mining and Salazar Resources full exemption from import duties on capital goods and raw materials, including on all equipment related to mines and mills.
It incorporates as well the approval of a special article on dispute resolution, including international arbitration protection.
The Ecuadorian government has committed to guarantee fiscal and legal stability to the companies. This means that all applicable laws related to the mining industry will be frozen during the term of the contract, unless there are new regulations that benefit the miners.
“We are thrilled to have completed this significant approval milestone (…) to further advance El Domo towards the start of construction in 2023,” Christian Kargl-Simard, CEO of Adventus Mining said in the statement.
The Toronto-based miners’ Curipamba project consists of seven concessions, including the El Domo deposit.
Once built, El Domo would be Ecuador’s third major mining operation. The only large-scale mines in the country to date are the Mirador copper mine, run by China-backed Ecuacorriente and Lundin Gold’s (TSX: LUG) Fruta del Norte gold mine.
The operation is also expected to bring $376 million in taxes and royalties into the state’s coffers over the 10-year mine life outlined by El Domo feasibility study, which does not include the additional development of underground resources identified, the companies have said.
Adventus Mining and Salazar committed in June to investing $270 million over the next 12 years at the project. The figure doesn’t include the $50 million both miners invested up to the end of 2021.