EGX Discovers Significant Gold Resources on Ecuador's New Frontier

TORONTO, Feb. 25, 2014 (GLOBE NEWSWIRE) -- Timing is everything. In 2010, betting on an improving political climate, Glenn Laing, CEO of Ecuador Gold and Copper (TSX.V:EGX) purchased the Condor Gold Project in Ecuador for about $2.50/ounce in the ground. This was forty times less than Kinross paid for the Fruta Del Norte project a few years earlier, just north of the Condor Gold Project.

Laing is a former investment banker and a Managing Director at RandGold in South Africa who has raised billions of dollars for various international mining projects. He abandoned his investment banking career to take on the role of CEO at EGX and has described the Condor project as "a once-in-a-lifetime opportunity."

From 2010-2012 EGX raised $25 million dollars to fund an exploration program in the largely unexplored mountains of Ecuador, proving up an NI 43-101 indicated resource of 6.4 million ounces of gold (averaging 0.62 g/t). A back-of-the napkin calculation suggests that EGX total costs-to-date are $3 per ounce. The spot price of gold has jumped $135 in the last 30 days to $1,324 an ounce. 6.4 million ounces of gold is worth $8.3 billion at today's spot price.

Laing was correct in his prediction that the regulatory environment in Ecuador is improving. Ecuador now has a formal mining law which has brought increased transparency, stability and foreign investment to the resource extraction sector.

President Rafael Correa is an economist and a business pragmatist who has a clear vision for the opportunities and responsibilities of international mining companies.

"There are people here [in Ecuador] who seem ready to create more poverty but leave those resources in the ground," stated Correa in a recent print media interview, "In the classic socialist tradition I don't know where Marx, Engels, Lenin, Mao, Ho Chi Minh or Castro said no to mining or natural resources. This is an absurd novelty."

Correa advocates consultation and negotiation with indigenous communities but will not allow them veto power over mining and oil drilling projects on their territories. "With so many restrictions," declares Correa, "The left will not be able to offer any viable political projects."

EGX is focusing on five main deposits within its Condor Gold Project which include: 1) Santa Barbara 2) Los Cuyes 3) Soledad 4) El Hito 5) Chinapintza (Joint Venture). The Condor Gold Project has an NI 43-101 indicated resource of 6.4 million oz gold (averaging 0.62 g/t) and a further inferred resource of 2.1 million oz gold (averaging 0.52 g/t). Also an NI 43-101 indicated resource of 18.5 million oz silver (averaging 2.43 g/t) and inferred resource of 4.5 million oz silver (averaging 1.09 g/t) and an NI 43-101 inferred resource of 1.1 billion lbs copper (0.31%).

"We have completed our phase two drilling program on Santa Barbara – our flagship asset," states Laing in an exclusive interview with Financial Press, "We drilled six holes in the Santa Barbara North deposit and one hole in the Santa Barbara South."

February 5, 2014, EGX released assay results from Santa Barbara's North Zone drill program, in support of the concept of a low-grade high-margin open pit bulk mining project. Assay results include 110 meters of 0.42 grams per tonne gold, starting at 158 meters, and 89 meters of 0.69 grams per tonne gold starting at the surface. Assay results from the final hole on Santa Barbara South will be released next week.

The majority of the resource expansion program was focused on the Santa Barbara North Zone about one kilometer northeast of the Santa Barbara South deposit where resources currently stand at 4.33 million ounces gold (averaging 0.57 g/t) and 520.0 million pounds of copper (0.1%) in the indicated category. There is an additional 1.6 million ounces gold (averaging 0.5 g/t) and 225 million pounds of copper (0.1%) in the Inferred category.

"We expect to have an updated resource estimate early in March," states Laing, "Our plan is to move Santa Barbara expediently into the Preliminary Economic Assessment (PEA) phase and then production."

"Because we have five potentially economic deposits, we are running our exploration and development program in sequence. Each deposit will require a separate PEA, and once in production, will generate a separate revenue stream. Los Cuyes is about two years behind Santa Barbara."

Ecuador Copper and Gold has completed the bulk of the engineering work for the Santa Barbara PEA. "Our initial metallurgical tests gave us good recovery rates," explains Laing, "But we are now trying to maximize the profitability for future extraction. The more metal you can squeeze out of each tonne of rock, the lower your cash costs. We have elected to do additional metallurgical test-work in order to maximise economic recoveries of copper and gold at Santa Barbara. The results from this metallurgical testing will be included in the PEA which we expect to complete in March 2014."

Executing his plan of sequential development, Laing has currently deployed exploration crews on the remainder of the concession. "Up to now we have focused our exploration and drilling program on known areas of mineralization," states Laing, "But we are now stepping out beyond these deposits with the intention of identifying new areas of mineralization that could potentially develop into the next generation of gold and copper deposits on the Condor Gold Project. There are a lot of potential areas that need to be explored."

The Chinese, who can cherry-pick battered resource companies anywhere in the world, have elected to form a joint venture with EGX on the Chinapintza Deposit.

Under the terms of the Joint Venture Agreement, EGX and the Guangshou Group plan to develop a 300 tonne per day of gold operation at Chinapintza under the "small‐scale mining program" which limits such exploration development to 300 tonnes per day of gold mineral extraction.

Ecuador Gold will retain a 30% interest in the Chinapintza project with Guangshou supplying all of the funds for construction and development of the asset. "This is a narrow vein, high grade deposit," states Laing, "well suited to the Chinese mining operators like Guangshou."

China and Ecuador are already strong economic partners, so Laing is building on an existing synergy. "The development of the Santa Barbara deposit is likely to involve Chinese partners," states Laing, "We are ensuring that the Guangshou Group is having a good experience, in terms of the permitting and the mining protocols in Ecuador."

"Our Chinese partner will put up all the capital to build the mine at Chinapintza," confirms Laing, "When the Chinese have enough data, they would move quickly into production. They anticipate this mine would produce an estimated 30,000 ounces of gold a year. The capex would likely be around $15 million. Once the Chinese have recouped their initial investment, Ecuador Gold and Copper would see a distribution of profit. I anticipate that happening in 2017."

Ecuador's mining sector is heating up. "We cannot afford to be beggars sitting on a bag of gold," stated Ecuador President Rafael Correa. Mining contracts have recently been negotiated with Chinese-backed EcuaCorriente. INV Metals recently acquired IAMGOLD's Quimsacocha Project. EcuaCorriente is proceeding with construction of Mirador copper and gold mine.

EGX is currently trading at $.08 with a market cap of $17 million.

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CONTACT: Ecuador Gold and Copper Corp. 5000 Yonge St. Suite 1901 Toronto, Ontario M2N 7E9 Phone: 1-416-227-3402 Fax: 1-416-628-3801 info@ecuadorgoldandcopper.comSource:Ecuador Gold and Copper Corp