Ecuador working to improve its Western standing?Last week we heard Kinross is beginning negotiations to regain losses from the Frute del Norte project by negotiating the right to sell the property. Today Bloomberg is reporting Ecuador is handing 13 tonnes of gold to Goldman Sachs as security against a $1.68 billion loan . Although no sane gold investor likes to hear the words gold and Goldman in the same sentence, these are steps that will likely go a long way to regaining Wall Street/Bay Street confidence. The Kinross fiasco and Ecuador's bond default five years ago along with Ecuador’s support of Hugo Chavez really hurt its reputation with international financiers.
These are the reasons the third major find in this region has gone unreported. Corriente and Aurelian were both successful buyouts that made investors a lot of money. EGX could, with sufficient drilling, prove to be even more significant yet it is trading well below explorers with next to no resources. Giving gold to Goldman is probably not good for gold as they will probably find a way to use it to continue managing the gold price down. However, over the longer term it is probably a positive step for EGX if it helps build confidence with Wall Street and Bay Street. What will happen to EGX if Kinross manages to regain the right to sell Frute del Norte to Chile’s Codelco as it is rumored to be considering?
https://www.bloomberg.com/news/2014-06-02/ecuador-sends-gold-reserves-to-goldman-sachs-in-liquidity-hunt.html
Of course, this doesn’t really affect the Chinese as this article explains:
“Kinross spent more than two years trying to negotiate reasonable terms without any success. It did not help the company’s case when Ecuacorriente, a Chinese miner, reached a deal with the government. Chinese companies are not subject to the same market forces as Canadian ones, and it was not realistic for Kinross to agree to a windfall tax.”
https://business.financialpost.com/2013/06/11/why-kinrosss-gamble-in-ecuadors-fruta-del-norte-failed/
Who knows what coul develop between now and a positive PEA in the fall?