Golden Opportunity: 600% Growth Expected in the Next Four Years

Matthew Carr By Matthew Carr, Emerging Trends Strategist, The Oxford Club

Metals

It’s exciting to witness the beginning of a golden age of great wealth…

Over the past two decades, we’ve seen the internet come to life and flourish. And fortunes worth billions upon billions have been made from this still relatively new industry.

Another one that still fascinates me is the California Gold Rush, which took place more than a century and a half ago. Fortune seekers set off for the West Coast with dreams of making it big…

Fortunes were made… and lives were changed forever.

The Birth of a New Gold Rush… in Ecuador

At the time of the California Gold Rush, Ecuador was a newly independent country, having freed itself from Spanish rule.

Today, Ecuador is in the earliest stages of a gold rush of its own…

Its nascent mining industry is worth just $1.1 billion. But over the next few years, that’s set to increase more than 618%.

That’s right: By 2021, Ecuador’s mining industry will be worth $7.9 billion.

To be fair, some of the miners operating in the country have market caps of more than 10 times that amount…

But that just shows how early it is for Ecuador’s mining sector.

In fact, the industry currently employs just 3,700 people in the country. But this number will swell to more than 16,000 over the next several years.

We truly are witnessing a gold (and copper) rush in Ecuador.

How Ecuador Opened Up for a Golden Moment

Besides resources – which we’ll get to in a moment – the big drivers are the country’s new regulations on mining companies.

First, Ecuador has eased back its 70% tax on mining profits. Today, this is applied only after a company has fully regained its capital investment costs.

On top of this, the commodities mined also must reach a predetermined price threshold for this tax to kick in. In the case of gold, it has to be more than $1,500 per ounce. For copper, it has to be more than $8,818 per metric ton.

Maybe most importantly, Ecuador created a mining ministry. Up until 2015, mining operations were regulated by the country’s oil and gas industry. This basically meant mining activity was ignored and left to wilt on the vine.

In October, after six years of doing nothing, the Ecuadorian government began granting new exploration licenses. Over the past year, it’s received 420 applications and granted more than 300 licenses.

Now, because of these regulatory improvements, mining investments in Ecuador are projected to increase 360% in the next four years to $3.9 billion. This is up from the $849 million spent between 2013 and 2016. And it’s a vast improvement from the mere $179 million spent between 2009 and 2012.

More importantly, “there’s gold in them thar hills!”

A Fruitful Mine in the North Southeast of Ecuador

Ecuador’s largest gold mine, Fruta del Norte, is expected to produce 340,000 ounces of gold per year once it’s up and running.

Fruta del Norte was discovered in 2006 and is one of the largest new gold finds in the world. It’s estimated to contain 4.82 million ounces of gold and 6.34 million ounces of silver.

This property is now owned by Canada’s Lundin Mining (OTC: LUNMF), and the miner expects first production to begin in the first quarter of 2020. And the mine should be fully operational by 2021.

Lundin’s worked out a deal with Ecuador’s government to pay $65 million in royalties upfront. It’s already paid $25 million and will pay another $20 million this year and the final $20 million next year.

Lundin bought the Fruta del Norte mine in 2015 from Kinross Gold (NYSE: KGC) for $240 million. Mining costs are expected to total $669 million.

Kinross couldn’t reach an agreement with the Ecuadorian government. Frustrated, the Canadian miner left the country, selling its vaunted asset to Lundin.

That was the straw that broke the camel’s back, so to speak: Kinross’ departure sparked Ecuador to overhaul its mining regulations.

Just before Kinross’ exit, IAMGOLD (NYSE: IAG) and International Minerals threw up their arms and left the country.

But Lundin isn’t the only miner working in Ecuador. In fact, mining companies from all over the world are flocking there…

  • Two Chinese companies, CRCC-Tongguan and Junefield Mineral Resources, are each developing mines of their own in Ecuador – the Mirador copper mine and the Río Blanco copper mine, respectively.
  • Canadian companies Aurania Resources (CVE: ARU), Cornerstone Capital Resources (CVE: CGP), Dynasty Metals & Mining (CVE: DMM), INV Metals (TSE: INV), Lumina Gold (CVE: LUM) and others all have exploration licenses, deposit agreements or active operations somewhere in Ecuador.
  • Australian miners Avalon Minerals (ASX, AVI), Fortescue Metals Group (ASX: FMG) and Newcrest Mining (OTC: NCMGY) are each working on mining projects. Another Aussie company – and the world’s largest miner – BHP Billiton (NYSE: BHP), just started investing in Ecuador last month.
  • And U.K.’s SolGold (LON: SOLG) has a major project at Cascabel in northern Ecuador.

So it’s an international race to unlock Ecuador’s resources.

There’s a gold rush in the Andes, where resources have largely been ignored, not just for decades… but centuries. Less than 16% of Ecuador’s territory has been explored. And the Ecuadorian government is finally working with miners to develop these projects.

More importantly, investors can get in at the beginning. This golden age of great wealth is still nascent. Rapid development is coming in the years ahead… and fortunes will be made.

Good investing,

Matthew

P.S. Gold in Ecuador is going to create fortunes.

But the 21st century has ushered in a new precious metal… and it’s driving some of the biggest technological advancements the world has ever seen…

It’s going to deliver gains as high as 900% to smart investors…

But timing is everything. Click here to learn more before it’s too late.