Advancing Loma Larga Loma Larga gold project, Ecuador
The Company continued to progress permitting activities, receiving the certificate of technical viability for the filtered tailings storage facility at the end of June, a key milestone for the project’s development. As previously reported, in April 2022, the Company received the technical approval of the Environmental Impact Assessment (“EIA”) study, which was submitted to the Ministry of Environment, Water and Ecological Transition (“MAATE”) by the previous owner prior to its acquisition by DPM. The MAATE has appointed facilitators to carry out the Citizen Participation Process, which was temporarily postponed following national protests that occurred in June. Once these activities resume, DPM and its EIA consultant will support the Citizen Participation Process, assess all comments received and make the necessary updates to the EIA in order to assist the MAATE in providing its final approval of the EIA and issuing the environmental licence.
In parallel, the Company continues to advance work to update and optimize the feasibility study (“FS”) completed by the previous owner. This includes progressing several trade-off studies aimed at further improving the project based on DPM’s expertise and experience, and the design of a metallurgical test program. DPM is targeting completion of a revised FS in 2022.
A 15,800-metre drilling program to support various studies complementary to the Loma Larga FS optimization, consisting of hydrogeological, geotechnical, metallurgical, condemnation and extension drilling, was commenced in the first quarter of 2022. A total of 658 metres of condemnation drilling was completed prior to DPM temporarily pausing drilling activities at the end of February as a result of the Action filed against the MAATE by certain non-government organizations and local agencies and the suspension of the environmental permit required for exploration and technical drilling by the court, pending the hearing of the Action.
On July 12, 2022, an oral decision delivered by the Judicial Labour Unit of Cuenca upheld the validity of the environmental permits for exploration, confirmed that the MAATE did not violate rights relating to the protection of water and nature in granting the permits, and reaffirmed the Company’s legal rights in the mining concessions. The court also found that the Company will be required to include the local indigenous populations in its consultation process prior to proceeding to the exploitation phase, which DPM had already planned as part of its development of the project, reflecting the Company’s commitment to the highest standards of stakeholder engagement and in line with International Finance Corporation practices.
The written decision was received on July 20, 2022, and DPM will be seeking clarification from the court as to whether the indigenous consultation may be done in parallel with the Citizen Participation Process and other activities required for the environmental permit, or whether the consultation must be completed before advancing those activities, which could delay the timing for the receipt of the environmental licence, currently expected to be received in the third quarter of 2022. The decision may also be appealed by the claimants within three days following completion of the clarification process. Drilling activities at Loma Larga remain paused, pending clarification from the court on the effect of the written decision in this regard and the impact of any appeals that may be filed.
As the permitting process progresses, DPM’s team is working proactively with stakeholders to obtain the project’s social licence to operate. Government interaction with the mining industry has improved significantly since the change in government in Ecuador in May 2021 and DPM maintains a constructive relationship with all government institutions and other stakeholders involved with the development of the project. The Company is also progressing discussions that are expected to result in the execution of an investor protection agreement with the government of Ecuador prior to making any significant capital commitments.