La Plata — a gold-rich, volcanogenic massive sulphide (VMS) deposit, 85 km south of Ecuador’s capital city of Quito — was the subject of small-scale mining from open-pit and underground workings between 1975 and 1981.
Cambior drilled it in the late 1990s and Cornerstone Capital Resources from 2006 until 2008–2009, when the country introduced a moratorium on exploration. Both companies released resource estimates — the last measuring 913,977 tonnes grading 8.01 grams gold per tonne, 88.3 grams silver per tonne, 5% copper, 6.7% zinc and 0.8% lead in the inferred category.
When Toachi Mining (TSXV: TIM) got involved in the project two years ago, it reassessed the historic resource estimates, which had been based on 13,000 metres of drilling, and came away impressed by the high grade. It was intrigued enough to sign an option deal with a private Ecuadorian company to earn between 60% and 75% of the project.
“La Plata is a gold-rich VMS deposit, so it is much rarer in the universe of VMS deposits on the planet,” Nick Tintor, Toachi’s president and CEO, tells The Northern Miner. “There’s clearly a deposit there … we looked at it carefully and are comfortable with that data, and are now doing our own work to verify and expand on the historic database.”
In August 2016 Toachi launched its own drill program to validate the previous drilling and to infill and expand known resources in the main VMS lenses that lie in and around the La Mina deposit, which was the original outcrop discovery.
At the end of last year, the company had completed 6,800 metres of drilling and plans to drill another 7,000 metres this year, which will include exploration drilling across the property.
In the latest assay results released in the second week of January, highlights include a 15.9-metre intercept of massive and disseminated sulphide mineralization grading 7.63 grams gold per tonne, 49.74 grams silver per tonne, 2.4% copper, 11.8% zinc and 0.97% lead, from 136 metres deep.
Another hole returned 2.3 metres of VMS mineralization grading 2.55 grams gold, 60.99 grams silver, 7.6% copper, 6.9% zinc and 0.7% lead from 30 metres deep, while a third produced 1.8 metres of 10 grams gold, 88.36 grams silver, 0.4% copper, 6.5% zinc and 3.2% lead, from 293 metres.
“We’ve had strong results,” says Tintor, who began his career as an exploration geologist and spent seven of his 30 years in the industry writing and editing for The Northern Miner (1983–1990). “We believe these grades can generate attractive operating margins that would make a 300- to 500-tonne-per-day mine very lucrative.”
Most of the historic drilling focused on the project’s La Mina deposit, which strikes for 9 km, and the fact that there had not been a lot of work done on the project “was one of the pluses,” Tintor says.
The company describes the project — which is characterized by geology typical of major gold-rich VMS camps around the world — as offering excellent potential for finding more VMS zones among its exploration targets.
“Geologically, VMS deposits typically don’t form isolated lenses, you see that from Flin Flon in Manitoba to Bathurst in New Brunswick to Rouyn-Noranda in Quebec,” Tintor says. “It’s what we expect to see in these camps, and this is no different in Ecuador.”
The rocks in Ecuador are younger, he says, but the geology is the same.
“We see favourable volcanic units, marker strata and the same types of mineralization: disseminated and massive sulphides occurring in stacked lenses, and we believe potentially laterally, in favourable volcanic stratigraphy.”
Toachi is prioritizing at least 14 new targets and the company is fully funded for 2017.
The two-and-a-half hour drive from Quito to La Plata is mostly on a multilane highway, with the last 13 km a gravel road. There is a new hydropower plant (called Toachi-Pilaton) that is 10 km from the site, and it is expected online this year.
The junior explorer is named after the Toachi River, which flows from the foothills of the Andes and winds its way to the Pacific Ocean.
The team at Toachi includes chairman Jonathan Goodman — president of Metaform Investments Inc. and executive chairman of Dundee Precious Metals (TSX: DPM) — and Laurence Curtis, the founder and first CEO of Intrepid Mines.
“We have a fantastic group of people who have done this before in previous lives,” Tintor says. “Jonathan was the founder of Dundee Precious Metals, a large multinational intermediate, and he drove that company to where it is today, and mining is in his blood. Laurence is one of Canada’s best known geologists and built Intrepid from a market cap of zero to over $1 billion, at one time.”
As for working in Ecuador, says Tintor, who has worked in challenging jurisdictions such as Niger, the Democratic Republic of the Congo, Bolivia, Chile and Peru, his experience has been “very positive.”
“It’s been an eye-opener — it’s a safe environment to work in, the government seems to be supportive. We’ve got technical talent down there and the infrastructure is really first-class,” he says. “They have invested heavily in infrastructure and I haven’t seen that in many places, and I didn’t realize it until I got there, so it’s been a good experience.”
In addition, Ecuador has some of the lowest hydro costs in all of the Americas, he says. “We don’t know yet what the impact of the low hydropower costs will be, but we do know it’s definitely going to be material. It’s far less than in countries like Peru, Colombia and Chile.” (In a 2015 presentation, Ecuador lists its industrial usage rates at US8¢ per kilowatt hour, which is lower than rates in Colombia, Peru, Chile and Mexico.
Tintor describes Ecuador’s Mines Minister, Javier Cordoba, as “a real passionate advocate of the mining push.”
“The reality is that oil prices collapsed, and that was their main revenue generator … and you had all of these amazing resources that were generating zero taxes.”
While Toachi has its hands full with La Plata, Tintor isn’t ruling out other acquisitions down the road.
“We have a great team down there now, and if we see something that is attractive we will certainly roll up our sleeves and take a look at it,” he says, adding that outside the formal government auction process, mining companies can also strike deals with Ecuadorian citizens.
“An individual in Ecuador can own mining concessions, and there’s a strong, small mining industry in Ecuador,” he adds. “It’s no different from Canada — people can own ground and do deals — and there are a couple of companies like those that we’re looking at.”
At press time Toachi Mining was trading at 40¢ per share within a 52-week trading range of 7.5¢ to 59¢, for a $16.4-million market capitalization.