PDAC2018 Reviews: Toachi Mining Inc.

March 20, 2018

20th March 2018 – 

Toachi mining (TSX: TIM.V OTCQB: TIMGF) are a Toronto based exploration and development company who were founded formally in 2015 and have been trading since 2016. The company are named after the Toachi river which runs some 15km from their key deposit through Ecuador and supplies water to major hydroelectric plants across the region.

Toachi’s primary ‘La Plata’ deposit has an impressive 2mt at 13g/t of gold (inferred) in the ground. The deposit sits 85km south west of Quito, on the borders of the Cordillera Occidental, a Cretaceous island arc environment composed of alternating basalt, andesite and mineralised volcanosedimentary strata. The region hosts a range of under explored Kurkoko-type volcanogenic massive sulphide ore deposit (VMS) systems along its 100km stretch.

La Plata itself displays classic volcanic assemblages associated with submarine VMS deposits around the world including across Canada’s Abitibi greenstone belt. This includes a well preserved dacitic footwall zone which hosts low grade disseminated gold and copper mineralization immediately overlain by lenses of high grading massive sulphide mineralization.

The hanging wall above the VMS zone is comprised of andesitic volcanic sequences which include a distinct jaspelite marker horizon. This marker horizon has been correlated across the entire strike length of the concession and is a stratigraphic marker horizon for guiding the company’s future exploration.

Geophysical surveys and mapping were performed throughout 2017 and continue into 2018. Data so far has identified 9 primary targets which the company intend to drill to better define the spread of metals at the property.

Toachi geologists hard at work prospecting for more high grade at the #LaPlata project in #Ecuador
Toachi geologists hard at work prospecting for more high grade at the #LaPlata project in #Ecuador

Toachi believe now is the right time to invest in Ecuador and they’re not alone, with a host of Juniors jumping into the jurisdiction (including into the properties next door, which is always a good sign), enticed by favourable new laws and governance. In recent times however, the country has swung around regarding their mining policies. How the country will develop its policies in the long-term, following the stricter governance from Rafael Correa’s early years as a famously left-wing ‘Democratic Socialist’ president? Nobody knows.

Correa’s early policies included open-ended company royalties and ongoing windfall taxes, he claimed these were essential for Ecuadorian development, environmental protection and to control corporate involvement in the country and we’ll never know if he was right. Many of his similar policies for corporate taxation and countrywide growth resulted in a (government recorded) reduction of poverty by some 14%. He also presided over regulation of the environmentally devastating artisanal mining industry, resulting in significant protests by local mining unions in Quito throughout 2012. This was followed by Kinross famously pulling out of their $1.3 billion project at Fruta Del Norte over a royalties dispute.

Now the country offers an 8% cap on royalty claims and profit taxes limited against the company’s investment inside Ecuador. This is a great model for international investors and mining companies looking to get into Ecuador for exploration and cash generation, but it has been unpopularly attempted in several African jurisdictions with limited success long-term. Newly elected ministers in the DRC have recently taken steps to reverse their similar tax breaks to major operators and caused widespread panic in the regional industry.

The country has had its share of headlines! While risks exist, so do the potential profits. Ecuador is rich with resources, barely tapped industrially since the Spanish raided the country in the 1600s. The nation’s people are welcome to honest trade and the government are more stable than many similar regions.

Flip a coin for the answers, for now at least, we think it should land on the side of Toachi!

Liam Hardy reporting from PDAC2018 in Toronto



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MiningIR hosts a variety of articles from a range of sources. Our content, while interesting, should not be considered as formal financial advice. Always seek professional guidance and consult a range of sources before investing.
James Hyland, MiningIR