Lumina Gold Secures Key Exploitation Contract with Ecuador Government for Cangrejos Project

Lumina Gold Secures Exploitation Contract with Ecuador

Vancouver-based Lumina Gold Corp. (TSXV: LUM, OTCQB: LMGDF) has reached a significant milestone by completing negotiations regarding the exploitation contract terms with the Government of Ecuador for its Cangrejos project. This binding term sheet sets the stage for the project, which is poised to be the largest primary gold deposit in Ecuador, advancing the company's agenda towards a more sustainable mining operation.

Major Achievement for Lumina Gold

Marshall Koval, the company's CEO and Director, expressed satisfaction regarding this development, stating that it marks a pivotal moment for both the project and the country. He extended gratitude to the government representatives involved in the negotiations and acknowledged the support of local stakeholders. Koval added that the agreed-upon royalty terms align well with Lumina's 2023 Pre-Feasibility Study and place the project in a strong position ahead of an upcoming Feasibility Study scheduled for the second quarter of 2025.

Financial Overview of the Agreement

The exploitation contract outlines a comprehensive structure for advanced royalty payments totaling USD 25 million spread across four payments:
1. First Payment: USD 2.5 million upon the signing of the exploitation contract in 2025.
2. Second Payment: USD 7.5 million to be contributed at the start of construction.
3. Third Payment: USD 7.5 million 12 months post-commencement of construction.
4. Fourth Payment: USD 7.5 million 24 months into the construction phase.

Additionally, the contract specifies a tiered NSR (Net Smelter Return) royalty for gold, copper, and silver based on market price thresholds, enhancing revenue potential for the project.

Implications and Future Outlook

This contract complies with the requirements of the amended precious metals purchase agreement with Wheaton Precious Metals International Ltd. The remaining USD 6 million is expected to be funded by Wheaton on December 2, 2024, providing crucial financial support for the project.

The exploitation contract ensures that at least 50% of net cumulative benefits from the project will accrue to the government of Ecuador, maintaining equitable profit-sharing. Furthermore, it includes mechanisms to amend the agreement in case of changes to taxes, laws, or regulations, offering stability for future operations.

Lumina Gold is keen on transitioning the project from its exploration phase to exploitation, with formal applications expected in the upcoming months through the Ministry of Energy and Mines. Once the necessary approvals are secured, the exploitation contract will be registered and disclosed publicly. An environmental license—an essential requirement before initiating exploitation—is also expected to be pursued during 2025.

About Lumina Gold

Lumina Gold Corp. specializes in developing valuable precious and base metals, with its flagship Cangrejos Gold-Copper Project located in the El Oro province of southwest Ecuador. With its strong management team, Lumina is well-positioned to navigate the complexities of the mining industry, focusing on sustainable practices that benefit local communities.

For more information, visit Lumina Gold's Official Website. Follow them on their social media platforms to stay updated on the latest developments.