While gold production in countries such as Peru, — which is South America’s leading gold producer — Brazil, Colombia, Bolivia and Argentina dominate South America’s market share, countries like Ecuador certainly aren’t going unnoticed. As of 2021, Ecuador’s gold production totaled 21.3 tonnes per year, an increase over last decades levels with Fruta del Norte coming online recently.
Companies like Luminex Resources Corp. (TSXV:LR, OTCQX:LUMIF, Forum) are looking to not only contribute to Ecuador’s presence in the gold space, but become one of the leading companies in country.
Headquartered out of Vancouver, BC, Luminex Resources is a precious and base metals exploration and development company focused on its Condor gold-copper project in Southeast Ecuador, located roughly 30 kilometers south of Fruta del Norte. In addition to the project, Luminex Resources has three separate copper focused earn-in agreements with BHP, Anglo American and JOGMEC, as well as several other early-stage exploration concessions in Ecuador.
Luminex is a Lumina Group company, which was founded by Ross Beaty (19.9% shareholder). It is backed by experienced management and board teams that have a history of exploring, discovering, de-risking and monetizing assets — Luminex Resources has what it takes to become a game-changer in Ecuador.
The presence in Ecuador
In an interview with Stockhouse Editorial, Scott Hicks, VP of Corporate Development for Luminex Resources, said that the company first entered Ecuador back in 2014 and acquired its Condor gold-copper project in 2016. He explained that mining in the country has improved thanks to changes made over the last three administrations. Changes have been made to taxes and royalty rates to make it much more attractive for investment.
“Geologically, [Ecuador] is one of the last systematically unexplored areas along the Andes, he said, explaining that it hasn’t been explored as much due to the anti mining mandates from 2008 to 2014 and the old tax regime. Major copper companies are now partnering with groups like Luminex to establish a presence in country.”
Hicks added that the area where the company’s Condor gold-copper project is “by far” the busiest area of Ecuador for investment, with two large-scale commercial mines completed in the trend at the end of 2019 (Mirador and Fruta del Norte).
“We think we’re in the right area of the country as well — not just the right country for the long-term” he said.
The Condor gold-copper project
Located in the Zamora-Chinchipe province of Southeaster Ecuador, the region is serviced twice daily by air from Loja, which sits three hours from the property. The Condor gold-copper project is also accessed by paved highways through the capital of Zamora and is 30 kilometers to the east of the village of Zumbi.
The project is highly mineralized with 135,000 meters of drilling, which defined five deposits and outlined various other high priority target areas.
Four distinct types of mineralization areas have been recognized at the Condor Project, including:
- An intermediate sulphidation narrow-vein epithermal system in the historical Chinapintza area
- Intermediate sulphidation epithermal gold-bearing diatremes, volcaniclastic and breccia bodies at Camp, Los Cuyes, Enma and Soledad (Condor North)
- Au-Cu porphyry mineralization at Santa Barbara and Cu-Mo porphyry mineralization at El Hito (Central Condor)
- A Low sulphidation gold-silver system hosted in hydrothermal breccias and epithermal veining at recently discovered Nayumbi Prospect (Condor South)
The company discovered a new high-grade region called the Camp deposit in 2019, which was integral to unlocking the lower grade open pit deposits at Los Cuyes, Soledad and Enma — collectively known as Condor North. These four deposits formed the basis for the ~190koz Au per year production plan over a 12-year mine life.
In total, the project contains gold resources of 2.3 million ounces indicated and 4.3 million ounces inferred, with substantial potential to grow these figures. Condor consists of 10,101 hectares and has numerous other targets outside of the existing resources. Between 1993 and 2016, previous owners included TVX, Ecometals and Ecuador Gold and Copper where roughly US$40 million was spent during that period.
Luminex will be using the C$9 million it just raised to drill across four targets over the course of 2022, which Hicks said will “likely improve the existing PEA area at Condor North and probe a new copper target between the existing gold resources”.
At present, Luminex Resources is focused on the Condor North region of the project with one drill rig. In May, the company resumed drilling at Condor North where initial drilling targeted the new high-grade gold discovery next to the Los Cuyes open pit mineral resource. An additional 1,500 meters over five planned holes will be drilled there to help Luminex better understand the extent of the discovery.
Drilling at Los Cuyes has the potential to add a second underground deposit, similar to the Camp resource. The company will also be drilling more at Camp to add to that existing resource. Lastly, at Condor North, the untested Prometedor target will be drilled. This could add a 4th open pit to the area.
The Company has also just started drilling at Central Condor with one drill rig around El Hito. This is a promising copper target with past drilling to the south that returned long intercepts above 0.4% copper. A discovery here could help integrate the Santa Barbara gold-copper porphyry into a future mine plan, as this large gold-copper resource was excluded from the 2021 PEA.
Luminex Resources’ partnerships
Although the Condor Project is much of the company’s focus, Luminex Resources has several key partnerships under its belt that will solidify its footprint in the space. These partnerships have brought in US$32 million of work in the ground and cash payments since 2018.
Notably, the company has an earn-in agreement with Anglo American, which it entered into on March 26, 2018, for the Pegasus project in the Western Cordillera of Ecuador. This encompasses a 67,650-hectare portion of the Macuchi Formation, which is a well demonstrated host of volcanic massive sulfide deposits among other styles of base and precious metal mineralization. Anglo American is expected to start a 5,000 metre program this year.
Under the terms of the partnership, between $57.3 million will be spent between 2018 and 2024, with $50 million of work commitment on Pegasus A and B over seven years. Anglo American can increase the work and payments at their discretion. Following completion of the spending, Anglo American will own 60%, which it can increase to 70% if Anglo American funds the project to a construction decision.
The company’s second earn-in agreement is with BHP, which Luminex entered into a non-binding agreement on March 19, 2019. Between 2019 and 2025, $42 million will be spent at the Tarqui project, which is located 24 kilometers northwest of the Mirador deposit within the porphyry rich Zamora copper-gold metallogenic belt. Post completion of the spending, BHP will own 60% of Tarqui which can increase to 70% of BHP funds an additional $40 million. BHP just finished a 5,000 metre drill program.
Lastly, Luminex has an earn-in agreement with JOGMEC for the Orquideas project where $7 million will be spent between 2022 and 2026. At the project, five holes totalling ~2,500 meters were just completed, with assays pending. JOGMEC will have the right to earn up to 70% ownership while Luminex will manage and operate the exploration programs and receive a management fee based on expertise.
The management team
Marshall Koval, CEO and director
Marshall Koval is a mining executive with roughly 40 years of corporate management, M&A, finance, mineral exploration and mine development and operations experience. Koval has worked on mining projects in over 30 countries and has served as chairman and CEO of Anfield Gold Corp. In addition to his role with Luminex, Koval is current CEO and director of Lumina Gold Corp., a director of Equinox Gold and a director of Miedzi Copper Corp.
Koval holds a BSc. in Geology from the University of Missouri and is a registered professional geologist in North Carolina and Washington.
Diego Benalcazar, President
Diego Benalcazar has over 25 years of experience in mineral exploration, mining property evaluation as well as acquisitions across Latin America and the Caribbean. Benalcazar has held managerial and consulting positions with several international mining companies including Homestake International Minerals Ltd. Benalcazar currently serves as senior vice president of Lumina Gold Corp.
Benalcazar holds a BA in geology from North Carolina State University and has completed the Program for Management Development at Harvard Business School.
Leo Hathaway, senior vice president of exploration
Leo Hathaway is a geologist with extensive experience in the exploration and mining sector from grassroots to feasibility and development stage projects. In tandem with his role with Luminex, Hathaway also serves as a senior vice president of Lumina Gold Corp and EVP of Exploration at Libero Copper. He served as Chief Geological Officer for Anfield Gold Corp. Since 2004, Mr. Hathaway was the former Chief Geological Officer for Lumina Copper Corp and the former VP Exploration for Northern Peru Copper Corp, Regalito Copper Corp, Global Copper Corp and Lumina Resources Corp as well as a former partner in Lumina Capital LP. Prior to 2004 he worked for Inmet Mining in Europe, Australia, Central and South America. Mr. Hathaway holds a B.Sc. (Hons) degree in Applied Geology from the University of Plymouth, a M.Sc. in Mineral Exploration from the University of London and obtained a P. Geo from the Association of Professional Geoscientists of Ontario in 2004.
The investment opportunity
As of the time of this writing, Luminex Resources has a market capitalization of C$47.61 million, share price of $0.36, 132.26 million shares and 132.26 million shares outstanding.
Although there are currently only two industrial mines in all of Ecuador that are constructed, Hicks said that Luminex Resources is on a path to join them — and that comes thanks to its experienced team and footprint in Ecuador.
Over the course of the rest of the year, investors can expect a bevy of news from Luminex as it continues advancing the Condor Project. Case in point, Hicks said that the company will be drilling at four different Condor targets, with no prior drilling at Prometedor and the new El Hito target.
In addition to the Condor Project, Luminex Resources’ three key partnerships with some of the top copper companies in the world will bring additional news flow and potentially some discoveries.
“[Luminex should have] drill results from the three partnered copper projects, Orquideas, Tarqui and Pegasus,” Hicks said.
Putting it simply, Luminex Resources is well-positioned to lead the way in Ecuador and, as its activities continue to expand in the country, investors will be paying close attention.
FULL DISCLOSURE: This is a paid article produced by The Market Herald.