The farm-out of the Curipamba VMS discovery provides Salazar Resources with a 25% free carried interest in a highly compelling project, as well as a recurring revenue stream. 

Salazar Resources has a farm-out with Adventus Mining in relation to El Domo, the Curipamba VMS discovery. Adventus can earn 75% of the project by funding exploration and development expenditures of US$25 million before October 2022. A Feasibility Study is expected to be completed during 2021, after which Adventus is required to fund 100% of the development and construction expenditures to commercial production.

Under the Curipamba Option, Adventus has agreed to provide Salazar Resources with advance payments of US$250,000 per year until achievement of commercial production, to a maximum of US$1,500,000. As operator, the Company also receives a 10% management fee on certain expenditures, with a prescribed minimum annual amount of US$350,000.

Upon achievement of commercial production, Adventus will receive 95% of the dividends from the Curipamba Project until its aggregate investment has been recouped.  At this point, dividends will be shared on a pro-rata basis according to their respective ownership. In certain circumstances, where project development is delayed post earn-in, Adventus’ ownership position could be diluted.

The 2019 PEA delineated a significant resource at El Domo at 4.9% copper equivalent. This is approximately an order of magnitude higher than average global copper grades. The high grades are reflected in the compelling set of economics, and the project is located in an increasingly pro-mining jurisdiction, with good infrastructure. At current metal prices the contained value evenly split 50:50 between precious and base metals. The six-year open pit has a higher gold grade than the overall resource, and the current pit design has a contained value split of 55:45 precious to base metals.

The PEA shows that El Domo can be a low-cost supplier of copper gold and zinc, generating cash flows after taxation of US$449 million over the initial six years of production, and delivering an IRR of 40% with a payback of less than two years.

Salazar Resources, Adventus and their consultants have identified several areas and opportunities that may provide significant cost savings and improved economics for the project. Post-PEA the team will embark on additional technical work and trade-off engineering studies to better position and further de-risk the project. This will include mining, milling and metallurgy, tailings storage and waste rock facilities, and local infrastructure. 

The partnership will also continue to conduct exploration activities within the 21,500-hectare Curipamba project which encompasses El Domo. The objective of continuing regional exploration is to develop and assess targets that could further maximize flexibility with respect to future development decisions on the El Domo, Curipamba project.

PEA Results Summary

Geology and Mineral Resource Estimate

El Domo, located within the Curipamba project, Bolivar and Los Rios Provinces, Ecuador is hosted in a juvenile volcanic-magmatic arc of the Paleocene-Eocene Macuchi Terrane that is known to host at least two other volcanogenic massive sulphide deposits.

Sulphide mineralization at El Domo is principally located at the contact between a felsic volcanic dome and overlying volcaniclastic strata and is generally flat lying. It has been traced for approximately 800m in a north-south direction and between 350m and 500m east-west. 

A Mineral Resource estimate for El Domo has been completed as part of the PEA to include all infill drilling completed in 2018. The updated, open pit constrained, Mineral Resource estimate for El Domo has an effective date of 2 May 2019 and is supported on information provided from 309 core boreholes, totalling 60,449 metres, completed between 2007 and 2018. The new Mineral Resource estimate has a total tonnage distribution of approximately 14%, 73%, and 13% classified in the Measured, Indicated and Inferred categories, respectively.

Measured Mineral Resources for El Domo total 1.4 million tonnes grading 1.92% copper, 0.37% lead, 3.52% zinc, 3.75 g/t gold and 58 g/t silver. The Indicated Mineral Resources for El Domo total 7.5 million tonnes grading 2.02% copper, 0.26% lead, 2.81% zinc, 2.33g/t gold and 49 g/t silver. The Inferred Mineral Resources for El Domo total 1.3 million tonnes grading 1.52% copper, 0.20% lead, 2.25% zinc, 1.83 g/t gold and 42 g/t silver.

Total Mineral Resource for El Domo

 Pit Constrained Mineral Resource for El Domo

 Underground Mineral Resource for El Domo

2 May 2019 PEA and Mineral Resource Estimate Update