Canada-based mining company Dundee Precious Metals (DPM) has signed an investment protection agreement (IPA) with the Ecuador government for its fully owned Loma Larga gold-copper-silver project in the South American country.

According to the terms of the agreement, the government has provided the mining company with tax stability and certain tax incentives.

The IPA also grants Dundee Precious Metals legal protections including stability of the regulatory framework and resolution of disputes through international arbitration.

Dundee Precious Metals’ incentives include a 5% discount on the income tax rate, fixed at 20%, and tax stability on value-added tax (VAT).

Besides, the mining company will be exempted from import duties for important machinery for plant and mine facilities at the Loma Larga project.

The terms of the agreement require Dundee Precious Metals to invest over $400m during the construction and production phases in order to develop the underground gold-copper-silver project.

Before investing significant capital in the Loma Larga project, the company also aims to achieve additional goals. These include the resolution of the constitutional court case and receipt of the environmental licence for the project.

Dundee Precious Metals president and CEO David Rae said: “The successful completion of the IPA is a significant milestone and positive step forward for the project. This agreement provides further legal protections and tax stability for DPM and our investors.

“The IPA represents our dedication to working collaboratively with stakeholders, including the Government of Ecuador. We will continue to take a disciplined approach to future investment and advancement of the project based on the receipt of other key milestones and overall operating environment in country.”

Located in the Azuay province, about 30km southwest of the city of Cuena, the Loma Larga project was acquired by Dundee Precious Metals in 2021.

The project is expected to produce around 200,000 gold equivalent ounces annually in the first five years, with an initial mine life estimated to be 12 years.