EquadorHi, below is a portion of a story I read from Gold Editor promoting another Equadorian play (CPP), I haven't included the info on CPP just the part of the story that speaks about Equador, there are references to Aurelian throughout.
Ecuador
Ecuador may hold the richest gold deposits in all of South America. Aurelian’s phenomenal drill holes (recent results included 161 metres of 6.51 g/t gold) and IAMGOLD’s potential elephant at Quimsacocha (3.5 million ounces and growing), are high-profile testament to the right geology, but far from the only examples.
Ecuador has been one of the most politically volatile countries in South America. Like most of the Third World, Ecuador is risky. However, Ecuador is a purely commodity-driven economy - like almost all of those in South America and Africa. The size of Nevada, Ecuador has only 13 million people. Most live on the coast, around Guayaquil, which is the country’s biggest city and its commercial center. It’s full of new high rises, the result of 10 years of business-driven growth. Ecuador exports about 500,000 barrels of oil per day, resulting in roughly US$30 million a day coming into the country that needs to be re-invested. Most ends up in the pockets of 20 or so families that really control the country - mostly descendants of the conquistadors that run the government, the economy and the military. As a result, it’s in nobody’s interest to create instability. There are no guerrillas in the mountains and little serious crime in the cities.
About 50% of Ecuador’s people live below the poverty line, and about 1.8 million out of 13.5 million live abroad (mostly in Spain, which accommodates immigration from Ecuador and several other Latin American countries). Their remittances back home are apparently only slightly less important than oil as a source of income for the country. Since 1994, the country’s economy has grown about 4%. While not great, this is not so bad considering the many government turnovers (pretty well every two years it seems) and that the currency was being inflated 50% or more per year for much of that time. Of note, these statistics are hardly reliable, with a large part of the real economy likely underground. In 2000 Ecuador finally abandoned its currency for the U.S dollar, significantly helping to stabilize the economy for the rich and poor alike.
Mining Sector
Ecuador has had very little in the way of modern mining. However, there’s plenty of evidence to believe that, at least in terms of richness, if not size, its gold deposits are even better than those of Peru or Colombia. Consider, for example, some more of Aurelian’s (ARU-TSXv) recent drill results from its flagship Fruta Del Norte (FDN) project:
• The 161-metres of 6.51 g/t gold, including 25.3 metres of 10.1 g/t gold and 15 metres of 15.5 g/t gold.
• Another hole in the same press release graded 2.96 g/t gold over 75.6 metres.
• In previous news, Aurelian announced 107.5 metres of 5 g/t gold and another hit of 173 metres of 4.73 g/t gold.
Then there’s IAMGOLD’s (IMG-TSX) Quimsacocha with 3.5 million ounces and growing with each set of drill results. Aurelian traded at pennies a year ago, and hit a recent high of $43. In September Goldmarca (GML-TSXv) pulled a spectacular hole 30 kilometres south of Aurelian’s FDN deposit: 308 metres of 2.57 g/t gold, including 284 metres of 2.75 g/t gold, 98 metres of 6.05 g/t gold and 24 metres of 12.7 g/t gold, 72.9 g/t silver and 4.1% zinc. The stock doubled on the news despite of its overly large float.
Ecuador is rapidly evolving elephant territory, with the recent success at Aurelian providing a leading indicator of the sort of extreme profits that can be made from quality companies now working there. Ecuador’s mineral endowment is exceptionally rich, perhaps the best in South America. This may indeed be the El Dorado the Spaniards were looking for.
Yet the place remains mostly unexplored, essentially because of the politics. Similar to most non-Anglo-Saxon countries, their mining law reserved all mineral rights to the state. A mining company could only get a license to operate on the state’s behalf. However, because there was no cost to holding a license, large tracts of prospective land were tied up without exploration. Now miners can acquire the actual mineral rights, but at a cost of one dollar per hectare per year, so many nuisance claimholders have dropped out of the picture. With that change, and the end of the border war with Peru back in 1998, foreign investment started flowing back into the country.
The new law also changed the physical dimensions of mining rights. Under the old system, mineral rights were granted on a horizontal basis—following structures, veins, etc. along defined horizontal levels. That was logical enough, given old technology. Now mineral rights in Ecuador are vertical. Like an inverted pyramid, a mining claim now extends from a given surface acreage down to a needlepoint at the center of the earth, like it’s done in most of the world.
Generally speaking, the areas of greatest mineral interest are in the mountainous region that runs roughly north-south right down the middle of the country. The western coastal areas and eastern jungle basin are dominated by tertiary to recent sedimentary rock, while the mountainous central region is dominated by marine sediments and volcanics of various sorts. There are active and dormant volcanoes aplenty – very encouraging given that such intrusive action supplies the heat and creates the fractures in the host rocks that enable the deposition of valuable minerals. Most of the concessions align themselves with this major north-south control.
In places like Ecuador, where miners make about $10 a day and most people want development enough to bend the rules in your favor, there are large rewards to those getting in early. It’s a highly leveraged way to play the commodity cycle, which we are convinced is barely half done, with the best yet to come. There’s a huge land rush taking place in the country, and Coastport with its partner’s efforts has the jump on most.