Executive chairman of EnviroGold (ASX: EVG) Brian Johnson has advised investors that Ecuador's President, Raphael Correa of Ecuador this week signed the country’s New Mining Law - which will provide a framework for exploration and mine development in the future.
This is expected to positively impact mining in the country, with its rich endowment of gold.
EnviroGold, as well as Canadian companies including Kinross Gold Corp (NYSE: KGC), Iamgold (NYSE: IAG) and Corriente Resources (AMEX: ETQ) are all planning new and substantial gold/silver, copper mines and exploration in Ecuador.
Brian Johnson said that the new regulations have been circulated in draft form for some time, but their enactment will bring a much higher level of certainty to investment by international mining companies in the gold rich country.
He said today EnviroGold expects drilling to commence next month at the adjoining Pinglio and Papercorp gold mines in Azuay Province, where the Company is earning a 65% interest in the small scale mines and highly prospective concessions, by the progressive expenditure of US$6.5 million.
In October 2009, the company's Canadian consultants advised, "“that the mining target for the two concessions is between 3.0 million and 4.0 million tonnes grading in excess of 10g/t Au, or a potential target resource in excess of 1 million oz Au.”
With "a realistic estimate of the overall mining potential for the concessions to be 3mt to 4mt with a diluted grade of 5.0g/t Au to 20.0g/t Au”.
The company aims to establish a number of headings to mine around 300,000 tonnes of ore per year grading at least 10g/t Au and producing 100,000 oz Au per year for a minimum of 10 years, Brian Johnson said.
Interestingly, the company's consultants also reported advice from the existing mine operators, that “the grades mined over ten years have been consistently in excess of 10g/t Au.”
Brian Johnson said today he hoped to have initial drilling results early next year.