Atico secures $157.9M investment protection for Ecuador project

Atico Mining (TSXV: ATY) has inked an investment protection agreement (IPA) with the government of Ecuador for the development of its La Plata mining project located 100 km southwest of Quito.

The IPA, which formalizes the commitment made by the Ecuadorian government during last year’s Prospectors and Developers Association of Canada (PDAC) convention, covers a total of $157.9 million in current and future investments.

Vancouver-headquartered Atico said the agreement would provide the added benefit of legal and tax stability throughout the life of mine. Under the terms of the IPA, Atico would receive an income tax reduction of 5% during the life of the contract, access to international arbitration in disputes, and protection from confiscation or expropriation of assets except under strict constitutional conditions with fair compensation.

Chief executive officer Fernando Ganoza said the IPA represents “a significant milestone” for the La Plata project, underscoring the company’s commitment to sustainable development and economic growth in Ecuador.

Shares of Atico initially surged after the Wednesday announcement before paring gains by market close. It continued to decline in the Thursday session, down 2% with a market capitalization of C$42.3 million ($30.6 million).

“This agreement, with its robust legal and tax stability provisions, not only safeguards current and future $157.9 million of investments throughout the life of the mine but also strengthens investor confidence by ensuring a predictable and secure environment,” he stated in a press release.

The La Plata project is currently at the very last stage of obtaining the environmental license and other permits required for development. The property covers two concessions covering a total area of 23 square kilometres along its 9-kilometre length, which contains known mineralization in two VMS (volcanogenic massive sulfide) lenses and nine priority exploration targets.

A 2019 preliminary economic assessment for La Plata showed that the VMS deposit holds 1.9 million tonnes in resources at an average grade of 4.1 g/t gold, 49.4 g/t silver, 3.3% copper, 4.5% zinc and 0.6% lead.

Development of La Plata will be supported by cash flow generated by Atico’s El Roble copper-gold mine in Colombia, which has been in operation since 1990.