Can Ecuador strike it rich with the world-class Warintza project?

The Warintza copper, molybdenum and gold project in southern Ecuador, owned by Canada's Solaris Resources, could become one of the most important mines in Latin America.

Currently in the advanced exploration stage, the project, located in the Amazonian province of Morona Santiago, 40km north of the Mirador copper mine, is considered one of Ecuador's strategically important mine developments.

In the coming months, the Canadian company and the Ecuadoran government will sign an addendum to the investment contract signed in 2022 for US$42 million. That addendum will outline investments of US$3.5 billion, making Warintza the second largest investment initiative in the country, after the US$4.2bn Cascabel copper and gold project being developed by Australian firm SolGold.

Solaris has guaranteed the advanced exploration and study phase with around US$105mn that it has raised in the last six months despite the complex internal situation in Ecuador, whose government is attempting to wage war on drug trafficking and organized crime.

According to the latest update of the Warintza figures, issued by Solaris on July 22, the estimated resources of the deposit are around 2.34Bt copper equivalent, of which 232Mt are measured, 677Mt indicated and 1.43Bt inferred.

BNamericas talks to Ricardo Obando, manager of Lowell Mineral, an Ecuadoran subsidiary of Solaris, about the substantial increase in the planned investment, the current status of the project and the dates on which construction of the mine could begin.

BNamericas: Why has the planned investment in the project increased from US$42mn to US$3.5bn?

Obando: In 2022, given the scale of the discovery, we signed an investment contract with the production ministry for US$42mn. This initial investment was intended to cover early and advanced exploration as well as to conduct studies.

By the end of 2022, our extensive drilling campaign began to reveal significant mining-geological potential within our concessions.

Following rigorous analysis in local and international laboratories, we identified substantial indicated and inferred resources, particularly copper, molybdenum and gold. This allowed us to update our information, project the development and revise the investment figure accordingly.

So far, we’ve identified six significant copper, molybdenum and gold targets within our concessions. This has enabled us to estimate and project the potential development and the required capital expenditure. We’re in the process of updating and increasing the investment contract, which is progressing.

We expect to formalize the addendum to our investment contract for US$3.5bn within one or two months.

We also project that we will create 5,000 jobs during the mine construction phase and 2,000 jobs during the production and operation phase.

Warintza is a world-class project and is expected to become one of the most significant in Ecuador and the region.

BNamericas: Will the mine be open pit, and what other production facilities does the estimated investment cover?

Obando: Given the size, magnitude, and location of the deposit, as well as the mineral quality, the mine will be open pit.

We’re working on the formulation and design of plants, camps, tailings dams and all the logistics and infrastructure required for a project of this scale.

Currently, we’re in the preliminary phases, conducting technical and conceptual studies for the comprehensive development of the project, under the guidance of the energy and mines ministry through the mining department, and the environment ministry.

BNamericas: How much have you drilled so far, and how much will be drilled in 2024?

Obando: In the initial exploration phase, we’ve already drilled approximately 139,000m.

In 2024, we plan to drill between 40,000m and 60,000m additionally as part of the advanced exploration phase to reconfirm and validate the significant discovery made during the initial exploration. So far this year, we’ve drilled 29,000m of our planned target.

Our concurrent district exploration programs are focused on discovering additional targets from an expanded portfolio of epithermal gold/silver and porphyry copper prospects.

Currently, we have seven drilling rigs operating simultaneously in our concessions, which are part of Shuar indigenous ancestral territory – an unprecedented situation. In 2022, we had 14 rigs drilling simultaneously.

BNamericas: How will you supply energy for the project? Do you plan to build a power plant?

Obando: About two years ago, in light of the promising geological results, we signed an MOU with Ecuadoran electricity company Celec to assess the capacity of the grid to meet our needs.

We’ve identified two phases: the first phase, mine construction, will require 8-10MW. For this phase, it’s likely that we’ll connect to the existing system and enhance the line to reach Warintza. This will involve repowering with generators and transformers.

In the second phase, for the project's operation, we estimate a need for between 230MW and 260MW, which presents a different challenge.

We’re in discussions with Celec because we recognize that Warintza will need to contribute to the national grid through self-generation projects or by supporting existing self-generation projects across the country through public-private partnerships.

We’ve engaged local and international consultants and are working to expedite the process to ensure energy availability when the mine is operational.

At the same time, we’re conducting technical, environmental and other studies required to provide energy for the project during its operation.

BNamericas: Could you build a mini-hydroelectric or wind power plant?

Obando: We don’t rule out any of these options. While we may have the initial phase of mine construction covered, we’re considering options for the project's development and operation when energy demands will increase.

Celec has presented us with an important portfolio of various projects. The MOU with Celec is focused on promoting the development of renewable energy sources.

We have considerable experience with Canadian investors who are interested in the water potential of Morona Santiago province. We’re also considering strengthening wind or photovoltaic projects in the country.

Additionally, we’re interested in the Santiago hydroelectric project, which would be near Warintza, for which Celec is developing the tender and contracting strategy.

We will need to make decisions on these options soon.

BNamericas: What is the current schedule for Warintza? What are the timelines?

Obando: The main challenge of this project is aligning the timelines and needs of the industry, investors, and stock markets with local, regulatory, social and political timelines in Ecuador.

Fortunately, we’ve managed to synchronize these timelines. Investors understand the community and social decision-making processes, especially in indigenous communities like the Shuar, where decisions are made through community assemblies.

Ministries may take time to review studies and issue permits, often influenced by media and political pressures. Political changes, such as changes in ministers and authorities, can also impact decision-making.

We’ve successfully managed to align these timelines, even with the pressures for timely milestones expected by international investors.

BNamericas: Have these timelines considered the February elections and potential change in government?

Obando: Yes, we’ve taken these factors into account and have an ambitious schedule that we’re updating based on the political climate.

We know that the February elections will result in a new president and national assembly, which presents one of our main challenges.

We’re closely monitoring the national assembly's discussions on the prior, free and informed consultation law because our project is located in indigenous territory. The development of future phases will require this law to ensure legal, social and political certainty.

BNamericas: Prior consultation is certainly a sensitive issue for the future of Warintza and mining in Ecuador.

Obando: Unfortunately, this issue has been distorted by opposition actors, anti-mining platforms, and certain NGOs. A fundamental right has been manipulated.

Clarity is essential for us because we aim to build a project that is legitimized with community consent. Therefore, our schedule also depends on the enactment of the prior consultation law. We hope it will be ready by the first quarter of next year.

BNamericas: What are the immediate actions to be taken in Warintza’s schedule?

Obando: In the coming months, we plan to begin environmental studies, including flora and fauna assessments, which will be coordinated with the environment ministry. Based on these studies, we will proceed with obtaining environmental licenses for mine construction.

We hope to secure all necessary permits for construction by the end of 2026 or early 2027.

Currently, the company holds valid environmental licenses for the advanced exploration phase. Obtaining environmental licenses can take two to three years, so we need to plan accordingly to secure the construction license by early 2027 and ensure community consent.

BNamericas: How are relations with the indigenous Shuar communities in the area?

Obando: Our agreements and ongoing dialogue with the communities are our greatest asset, enabling us to effectively plan and execute geology and drilling operations.

Each meter of drilling is conducted with community consent, accompanied by fair employment, local entrepreneurship and investment. The project could not proceed without the full consent of the Shuar Warints, Yawi centers and the surrounding Shuar communities with whom we’ve built strong relationships of dialogue and participation.

We understand that obtaining community consent is crucial for future project phases, and we’ve established solid foundations for dialogue and participation with them.