Silvercorp, Salazar announce positive Ecuador court ruling

 2 days ago 

Silvercorp Metals Inc. [SVM-TSX, NYSE American] and Salazar Resources Ltd. [SRL-TSXV, SRLZF-OTCQX, CCG-FSE] said they have obtained a positive Provincial Court ruling in Ecuador affirming their right to continue construction of the El Domo-Curipamba copper-gold project.

The Provincial Court of Bolivar in the province of Ecuador where the project is located dismissed an appeal filed by the plaintiffs, affirming a lower court decision that the Ministry of Environment, Water, and Ecological Transition of Ecuador correctly discharged the environmental consultation obligations prior to issuing an environmental license for the project.

Salazar shares were unchanged at $0.08 and trade in a 52-week range of 12 cents and $0.045. Silvercorp eased 2.8% or 16 cents to $5.44. The shares trade in a 52-week range of $7.34 and $2.98.

Silvercorp secured a majority interest in the asset back in April, 2024 via the acquisition of Adventus Mining Corp. which held a 75% stake in El Domo. At its maiden discovery, Curipamba, Salazar Resources has a 25% stake fully carried through to production.

Adventus earned its majority interest in Curipamba via a 2017 deal with Salazar. Under the agreement, Adventus pledged to provide US$25 million for exploration and development expenditures over five years, while meeting certain development obligations. Adventus also agreed to fund capital costs to production and receive 95% of the free cash flows until all of its investments since 2017 are repaid, after which the project cash flows will be shared on a 75% and 25% to Salazar basis.

In December 2021, Adventus published a feasibility study covering the open-pit mineral reserve of the El Domo – Curipamba project. It is based on proven and probable reserves of 6.5 million tonnes of grade 1.93% copper, 2.52 g/t gold, 2.49% zinc, 45.7 g/t silver and 0.25% lead. The feasibility study envisaged a 10-year mine life with average annual production of 21,390 of copper equivalent.

The initial capital cost was pegged at US$248 million, with a payback period estimated at 2.6 years.

Back in January, 2022 Adventus and Salazar secured US$235.5 million for development of the Curipamba Copper Project via financing deals with Wheaton Precious Metals Corp. (WPM-TSX, WPM-NYSE) and Trafigura Pte Ltd.

In its latest news release, Silvercorp also announced a repayment of funds previously drawn by Adventus from Wheaton Precious Metals under the previous precious metals purchase agreement.

As of September 30, 2024 Wheaton had advanced US$13.25 million. Under an agreement, Adventus was required to deliver approximately 92.3 ounces of gold per month (at today’s gold prices, this is the equivalent to an annual interest rate of approximately 18.5%), starting July 2024, until construction of El Domo reached certain milestones or these funds were repaid. As a result of the repayment, the precious metals purchase agreement’s (PMPA) full $175.5 million cash contribution will be available to be drawn by Silvercorp during construction, subject to certain conditions.