Junin Mineral Property: History

DGGM Dirección General de Geología y Minas del Ecuador
AGCD Belgian State, Technical Assistance Mission
JICA Japan International Co-operation Agency
MMAJ Metal Mining Agency, Japan (MMAJ)
CODIGEM Corporación de Desarrollo e Investigación Geológico-Minero-Metalúrgica

Dr. Roque Bustamante
Ascendex
Ascendant Ecuador

A series of exploratory works have been carried out in the Junin area by previous operators of the Golden 1 and 2 concessions. The following historical disclosure has been taken from the Junin Report:

1981-1982: The first systematic study of the Junin area was a regional geochemistry investigation carried out by the DGGM during 1981-1982. The result was the delimitation of several Cu, Mo, Au and Ag anomalous areas. No further detail of this work was available to Micon.

1984-1985: In 1984-1985 geological, geochemical and geophysical investigations were carried out in a cooperation project with AGCD and although some promising areas were delineated, the exploration was not continued. No detail of this work was available to Micon.

The following information was derived from research performed by Ascendant in order to present a more detailed history than that outlined in the Junin Report and to give background information as to the evolution of the mining industry in Ecuador:

1988: The World Bank granted Ecuador US$10 million and loaned another US$14 million to set up Prodeminca, a non profit Ecuadorian Governmental mineral exploration organization. Prodeminca’s aim was to create a geological map of Ecuador’s mineral resources which could be available to international mining companies. The theory was, that if a base work outlining resource locations was generated, Ecuador could then attract direct foreign investment into its under-developed mining industry.

Over the course of the following three years, geological mapping was performed and thousands of samples were taken, processed, and analyzed. Several anomalous geologic mineralization occurrences were found in and around the Junin region.

1990: JICA and the Ecuadorian Government signed an agreement stating that the JICA would donate funds, technical support, transfer technology, and create jobs in an attempt to assist Ecuador in raising the standard of living of the populace through an international aid agreement between JICA and the Ecuadorian Government. JICA is a world renowned non-profit governmental organization that assists impoverished nations to economically advance domestic industries.

Ecuador at the same time created a governmentally funded organization called CODIGEM. The purpose of CODIGEM was to work with one branch of JICA to further the development of the mining industry in Ecuador. JICA continues to this day having several development programs in Ecuador, but the development of the mining industry through JICA eventually became a cooperative development between CODIGEM and MMAJ. MMAJ has more than 30 years of history of geological survey and exploration programs in developing countries through the Official Development Assistance program of the Japanese Government. This is a non-profit organization looking to delineate major metallic resource discoveries.

1991-1993: MMAJ studied the Junin area over this three year time span collecting hundreds of soil and stream samples and eventually drilling 10 holes.

The final thesis of MMAJ was that Junin is a large copper porphyry property that warrants further exploration. Unfortunately the physical samples from their study were destroyed at the end of 2002 in accordance with an internal policy of storing samples for up to 10 years.

1993-1997: At the end of 1993, MMAJ turned the project over to Bishi Metals, a subsidiary of Mitsubishi Metals, a branch of the Mitsubishi Corporation. Bishi Metals was initially welcomed with open arms by the local community, but this turned sour as Bishi Metals refused to communicate with the local communities and involve them in the development of the area. Bishi Metals went on to complete four more years of exploration, drilled 20 more holes, and built a geologic reserve model. All of the compiled data collected by both MMAJ and Bishi Metal remains in the hands of the Ecuadorian Government. The drill cores and the original drill logs are both located in facilities run by the Ministry of Energy and Mines in Quito, Ecuador. Ascendant has open access to these results.

Bishi Metals finally left the area after a major revolt by the local communities. The biggest cause for community anger was the closed-door policy that the Japanese managers had maintained for six years with the local community. After the company left, the concessions reverted back to the Ecuadorian Government. In 2000, a new mining law was passed, liberalizing the mining industry as well as privatizing concessions held by both the government and the military. Thus the Junin concessions were auctioned off in 2002. The acquirer was Dr. Roque Bustamante who, working with a group of mining investors, managed to secure the rights to the Junin property.

2002-2003: Shortly after gaining the rights to the Junin property, Dr. Bustamante was sued by some of the local communities that argued that their municipality could create local laws that superseded federal law and challenged his title to the Junin property. The local initiative pushed for the banning of mining operations in the Junin area. This was a direct challenge to both the mining and energy sectors of the national economy. At the same time mineral exploration around Junin had been non-existent for four years. Some of the local communities over this time period were feeling the effects of low standards of living, no running water, no electricity, no schooling past the fifth grade, no hospitals, no roads, and no access to the national markets for their agricultural products. Furthermore, unemployment rose and eco-tourism, which was the proposed substitute industry, never materialized causing many to begin to change their attitudes towards mining.

Meanwhile, Dr. Bustamante fought the lawsuit. The suit first went to the District Court, which ruled in favour of the local communities and against Dr. Bustamante. Dr. Bustamante appealed the decision to the lower national courts where he received a vote of 3 to 2 in his favour but needed a unanimous victory to overturn the District Court’s ruling in favour of the communities. Finally on an appeal to the Supreme Court in December of 2003., Dr. Bustamante won by a simple majority of 5 to 2. This decision cannot be further appealed or challenged in the courts.

2004: On March 29, 2004 an agreement was finalized transferring legal ownership of the Golden 1 and Golden 2 concessions comprising part of the Junin property to Ascendex from Dr. Bustamante in exchange for minimum annual payments and a 2.5% NSR royalty. On September 17, 2004, Ascendex transferred ownership of these concessions to Ascendant Ecuador.

2005: On January 20, 2005, Ascendex acquired the Magdalena 1 concession. On February 24, 2005, Ascendex transferred ownership of this concession to Ascendant Ecuador. There have been no other historical owners of the Magdalena 1 concession.