SolGold, Cornerstone rally on Ecuador court decision

The Alpala copper-silver-gold deposit on the Cascabel Project in Ecuador. Source: SolGold Plc.

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Australian-based SolGold Plc [SOLG-TSX, LSE AIM; SLGGF-OTC] shares rallied Friday June 21 after the company released a statement saying that the Ecuadorean Constitutional Court has rejected calls for a referendum on mining that could have impacted the company’s Cascabel copper-gold joint venture with Cornerstone Capital Resources Inc. [CGP-TSX; CTNXF-OTC; GWN-FSE].

SolGold confirms the Ecuadorean Constitutional Court has unanimously and definitively rejected the petition heard on June 5, 2019, the company said in a press release on Friday. “With this decision, the petition has been closed and the case closed.”

Cornerstone said that on May 27, 2019, certain individuals from small communities up around the Cascabel Project and other projects in northwestern Ecuador petitioned the Ecuadorian Constitutional Court in Quito to rule on whether they may legally hold a referendum to ask the question: “Are you in favour of mining in your communities?”

For a vote to proceed, the petitioners needed court approval and 10% of the signatures of the voting population of the provinces involved.

SolGold said Friday the Court rejected the petition on the basis of technicalities. “The Court did not discuss, or rule on, the merits of the case,” it said. “The formal resolution of the Court with further detail in to its rejection of the petition is yet to be published.” SolGold said it will provide further detail in due course.

SolGold shares advanced on the news, rising 7.4% or $0.04 to 55 cents. The shares trade in a 52-week range of 31.5 cents and 76 cents. Cornerstone also jumped 13% or $0.03 to 26 cents. Cornerstone shares trade in a 52-week range of 14 cents and 39.5 cents.

A similar referendum was held in March, 2019 in the Giron Canton subdivision of Ecuador’s Azuay province, with the community voting against mining activity. As a result, INV Metals Inc. [INV-TSX] is now planning to relocate the proposed processing and tailings facilities for its Loma Larga gold-copper-silver property.

The Cascabel Project is a porphyry copper-gold deposit located in the Imbabura province of northwestern Ecuador, which lies within the under-explored northern section of the richly endowed Andean Copper Belt.

Solgold recently released a preliminary economic assessment for the Alpala copper-silver-gold deposit on the Cascabel Project.

According to the PEA, the project can produce an average of 207,000 tonnes of copper, 438,000 ounces of gold and 1.4 million ounces of silver in concentrates per year over the first 25 years of operations.

Exploraciones Novomining S.A. (ENSA), an Ecuadorian company owned by SoldGold and Cornerstone, holds a 100% interest in the Casabel concession. Subject to the satisfaction of certain conditions, including SolGold’s fully funding the project through to feasibility, SolGold will own 85% of the equity of ENSA and Cornerstone will own the remaining 15%. SolGold is funding 100% of the exploration at Cascabel and is the operator of the project.

Lawyers for the companies potentially affected together with lawyers from state mining company ENAMI (which has concessions in the area), the Ministry of Energy & Non-Renewable Natural Resources (MERNNR) and the Solicitor General’s Office co-ordinated their intervention in the proceeding and enlisted the support of local communities that would be affected.

SolGold says it currently employs 500 Ecuadorians and its staff is 97% Ecuadorian.

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