HIGHLIGHTS • On January 10, 2020, the Company entered into an investment agreement with Trexs Investments LLC (“Trexs”)
(the “2020 Investment Agreement”), pursuant to which Trexs and eligible contingent value right holders were
entitled to participate in a private placement (the “2020 Private Placement”) of up to US$20,000,000 of
contingent value right certificates (the “2020 CVRs”).
The 2020 Private Placement was completed in two stages.
- On January 13, 2020, the Company issued US$16,258,890 of 2020 CVRs.
- On February 4, 2020, the Company issued US$1,725,370 of 2020 CVRs.
Eco Oro Minerals Corp.
Management’s Discussion and Analysis
For the year ended December 31, 2020
(Expressed in thousands of Canadian dollars unless otherwise specified)
Holders of the 2020 CVRs are entitled to receive an amount of money from the proceeds (if any) of the ICSID
Arbitration (the “Claim Proceeds”), with the amount they are entitled to receive (the “2020 Total CVR Amount”)
to be based on the amount of time between the closing of the 2020 Private Placement and payment of the Claim
Proceeds. As the 2020 Total CVR Amount will be funded by the re-direction of amounts to which the holders of
contingent value right certificates issued in 2016, as subsequently amended in 2019, and holders of contingent
value right certificates issued in 2019 would otherwise be entitled, the 2020 Private Placement will not have any
impact on the amount of Claim Proceeds (if any) retained by the Company.
• On January 14, 2020, the Company used proceeds from the 2020 Private Placement to repay a bridge loan
received from Trexs in 2019 (the “2019 Bridge Loan”) in full, with a repayment amount of $8,581 (US$6,569,174).
• The final hearing in the ICSID Arbitration took place in Washington, D.C. from January 20 to 24, 2020.
• On March 1, 2020, the Company filed its Post-Hearing Brief in the ICSID Arbitration.
• On March 18, 2020, the Company completed the second phase of a transfer of property to Sociedad Minesa de
Santander S.A.S. (“Minesa”), a Colombian gold mining company with a project neighboring Eco Oro’s Angostura
Project, and received gross proceeds of US$600,000 from Minesa.
• On July 31, 2020, Blair Wallace was appointed to the Company’s board of directors to fill the vacancy created by
the resignation of Rebecca Berrebi.
• On December 17, 2020, the Company completed the final phase of the transfer of property to Minesa under the
asset purchase agreement dated July 6, 2018 and received from Minesa US$3,400,000 in gross proceeds.
• On January 19, 2021, Cameron Brown was appointed to the Company’s board of directors to fill the vacancy
created by the resignation of Anna Stylianides.
ICSID ARBITRATION
Status of the ICSID Arbitration
In the ICSID Arbitration, Eco Oro seeks compensation for all of the loss and damage resulting from Colombia’s
wrongful conduct and its breaches of the protections set forth in the Free Trade Agreement against inter alia
expropriation, unfair and inequitable treatment and discrimination in respect of the Angostura Project, as discussed
further below.
On December 8, 2016, Eco Oro filed the Request for Arbitration against Colombia with ICSID. The claim relates to
Colombia’s measures which have deprived Eco Oro of its rights under its main mining title, Concession 3452,
comprising the Angostura gold and silver deposit, thereby depriving Eco Oro of the returns that would have resulted
from its investment in the development of the Angostura Project, and destroying the value of its investment, in
violation of Colombia’s obligations under the Free Trade Agreement.
The final hearing took place in Washington, D.C. from January 20 to 24, 2020, and on March 1, 2020, the Company
filed its Post-Hearing Brief. The Company is seeking US$696 million plus interest at a rate of 6.6 percent per annum,
compounded semi-annually, as compensation for damages the Company sustained as a result of Colombia’s
measures. The Company has not recorded any amount in the financial statements as a contingent gain due to the
ultimate uncertainty of the outcome.
OUTLOOK
Notwithstanding the continuation of the ICSID Arbitration, the Company remains open to engagement with the
Colombian authorities in order to achieve an amicable resolution of the dispute.
In the meantime, the Company’s immediate plans for the ensuing year are as follows:
• to advance the ICSID Arbitration;
• to continue to assess the Company’s activities, including monetization of certain of the Company’s assets
(including the potential disposition of assets, plant and equipment acquired for the Project) and cost-reduction
to support the preservation of its core assets and rights, in an effort to mitigate losses;
• to carefully manage its cash resources;
• to continue to assess the Company’s mining titles and related ongoing regulatory requirements; and
• the protection of its rights and interests in Colombia.
COVID-19
In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious
disease outbreak, which has continued to spread, and any related adverse public health developments, have
adversely affected workforces, economies, and financial markets globally, potentially leading to an economic
downturn. To date, the COVID-19 has not had a significant impact on the Company’s operations.
With respect to the Company’s arbitration claim against Colombia, the Company considers that, due to the advanced
stage of the proceeding, the impact of COVID-19 is likely to be insignificant. The final hearing took place in late
January 2020 and the Company filed its Post-Hearing Brief (its final written submission) on March 1, 2020, following
which the Tribunal began its deliberations prior to issuing a final award. The Company is working closely with legal
counsel to consider any possible impacts as a result of COVID-19.
In terms of the closure plan submitted in Colombia, COVID-19 may delay the decision to be made by the Colombian
authorities.