QUITO, Ecuador, Nov. 16 (UPI) -- China will be a major financing and engineering partner in a gold mining development project in Ecuador seen as a crucial step toward the country's economic development.
International Minerals Corp., a major Canadian gold and silver producer in the Americas, said it signed memorandums of understanding with China CAMC Engineering Co. Ltd. for the financing and construction of IMZ's Rio Blanco and Gaby gold projects in Ecuador.
IMZ President Stephen Kay said the Chinese partners in the project "have a well-established reputation for designing, engineering and constructing high-quality, turn-key industrial projects worldwide. We look forward to working with China Co. to expedite the financing, construction and commencement of production at the Rio Blanco and Gaby deposits."
IMZ holds a 100 percent interest in the Rio Blanco project and variable interests in the mineral concessions comprising the Gaby project, ranging from 51 percent to 100 percent.
The Rio Blanco project is believed to hold proven and probable reserves of 605,000 ounces of gold and 4.3 million ounces of silver.
The Gaby mine is estimated to hold 6.9 million ounces of gold.
The Chinese company would arrange debt financing for the projects through one or more Chinese financial institutions and also construct and deliver turn-key mining operations based on an industry-standard engineering, procurement and construction contract.
The transaction remains subject to a number of conditions, including the receipt of permits for the construction of mining and processing facilities at the projects, Canadian regulatory approvals and the completion of documentation for the production financing and EPC contract.
The final amount of financing required for the projects remains subject to final engineering and design work by China CAMC Engineering Co. Ltd., a publicly traded majority-owned subsidiary of China National Machinery Industry Corp.
A feasibility study at Rio Blanco was completed in 2006 and detailed engineering at the mine is 90 percent complete. Approval of an environmental impact study for developing the mine was well-advanced before Ecuador's government suspended all exploration activities in March 2008.
IMZ said the exploration process is expected to resume shortly. The earliest that production could begin at Rio Blanco would be late in 2013 or early 2014, it said.
Production is still dependent upon the negotiation of a production contract under Ecuadorian law, said IMZ.
A preliminary feasibility study at Gaby established an estimated 6.9 million gold ounces but production at the mine will take longer as a full feasibility study remains to be completed.
Ecuador's 14.7 million population depends on exports of commodities and minerals and is recovering from several years of an economic downturn. The gross domestic product of about $114 billion generates a GDP per capita of about $8,000 a year.
International Minerals is a silver-gold producer and developer. In addition to Ecuador, it has silver and gold production from its 40 percent-owned Pallancata Mine in Peru, one of the Top 10 primary silver mines in the world. The company expects to produce about 10 million ounces of silver and 33,000 ounces of gold at the mine in 2010.
IMZ also owns a 40 percent interest in the Inmaculada gold-silver project in Peru and majority or 100 percent ownership in development stage gold projects in Nevada. IMZ owns a 3 percent net smelter return royalty from Barrick's Ruby Hill gold mine in Nevada, which produced approximately 100,000 gold ounces in 2009.