Ecuador has been a hotspot of mergers and acquisitions in the copper and gold space in the last couple of years.

Under-explored compared with its Andean neighbours and a pro-mining government have helped things along, as has the global scramble for large-scale copper and gold deposits in light of the record-breaking price performance of the metals.

Most recently there was the $A1.7 billion acquisition of the London-listed Solgold by China’s Jiangxi Copper for its monster Cascabel copper-gold project in northern Peru, up near where Gina Rinehart’s Hancock prospecting has taken up a big ground position.

Cascabel is the one that BHP and Newmont once had designs on. But they sold into the Jiangxi takeover offer.

And then there was the acquisition of a 9.9% stake in ASX-listed Titan Minerals (TTM) by China’s Lingbao in October. Titan owns the 3.9Moz and growing Dynasty gold project in southern Ecuador and has an exploration joint venture with Hancock Prospecting in the country.

To the list of recent corporate action, on a pending basis at least, can be added the honest toiler of ASX companies operating in Ecuador, Sunstone Metals (ASX:STM).

Sunstone has been active in the country since 2017, making it a trailblazer. And it has just reached an important pivot point with the release of a scoping study on its 3.6Moz gold-equivalent – and growing – Bramaderos gold-copper project in southern Ecuador.

Importantly for the $87 million Sunstone (38.5c a share), the scoping study speaks to the inherent value of Bramaderos beyond its modest cap, as well as jellying things Bramaderos in the minds of the groups involved in a partnering process being run by RBC.

The partnering process essentially means Sunstone is in play.

Will there be a deal at the project level, or the corporate level? We’ll have to wait and see.

What is more certain is the scooping study has demonstrated there is a value disconnect between Sunstone’s market cap and the value of Bramaderos, with Sunstone also owning the less advanced El Palma copper-gold project in the north, up near Cascabel.

The scoping study covered off on an initial 23- year mine life from a development costing US$511M for 135,000oz AuEq per annum, and averaging 125,000oz AuEq per annum for the life of the mine.

The all-in sustaining cost was estimated at US$1,499/oz AuEq (after credits) which would have Bramaderos matching it with the best on the ASX.

While the grade is low compared to the Western Australian goldfields, Bramaderos draws its strength from a low strip ratio, labour costs of one-third of WA, copper by-product revenue and easy access to cheap power and the nearby Pan American Highway.

A large-scale porphyry deposit (the company has an exploration target on the potential for another 5-13Moz AuEq), the bulk mining opportunity at Bramaderos from a pit constrained resource delivers low unit costs with a runway of more than 20 years, with the potential for production to be upsized and extended over time.

Using a base case US$3,500/oz gold price, the project has an after tax NPV of US$900 million. Use a spot gold price of $US5,000/oz and it takes off to a NPV of US$2.7 billion – or more than 30 times the current market cap of the company, which is kind of interesting for the gold bugs out there.

Sunstone boss Partrick Duffy hosted an investor call on the scoping study during the week. Naturally enough, there were questions on the progress of the RBC-run partnering process for Bramaderos.

He said progress was good and he was confident RBC would deliver an end result. Interestingly given some other projects have come up against local opposition in Ecuador, Duffy said there was a lot of interest from the parties in the project’s location.

“It’s in southern Ecuador, in the base of this valley that’s remote, with a very supportive community – a sort of dream mining scenario with this large opportunity,” Duffy said.

He would not be drawn on whether a full takeover bid for Sunstone could emerge from the partnering process.

“But certainly all options are on the table, whether it’s a takeover, whether it’s strategic interest at the corporate level, a joint venture or asset acquisition.

“We are dealing with lots of parties with their own preferred transactions and we’re looking to shortlist them into what’s the most sort of compelling offers for our shareholders.’’

PMET (PMT)

The ASX-lithium stocks are up and about in response to the price of the battery material lifting off last year’s lows in a major way.

For the hard-rock producers, prices for spodumene concentrate are up from US$600/t lows to more than US$2,400/t.

Happy days for the producers. But what of the developers?

It stands to reason that they should be optimising their projects to ensure that when they do get in production, their cost of production is as competitive as can be through the cycle, and boy does lithium cycle.

There are many ways to ensure that. But one of the surefire ways is to become a lithium producer with by-product production of tantalum and caesium.

Many of the projects can add in a tantalum circuit (the price has recently tripled thanks to capacitor demand from the data centre build out). But high-value caesium is another thing all together.

Dual-listed PMET (ASX:PMT, formerly Patriot) has caesium in abundance at the CV13 deposit at is Shaakichiuwaanaan project in Canada’s James Bay region. In fact, it is the world’s biggest known resource of pollucite-hosted caesium in a pegmatite.

Shaaki for short, with apologies to the First Nation people who were given re-naming rights to the former Corvette project name, is one of the next lithium projects to be developed, with a feasibility study in October outlining a project producing up to 800,000t of spodumene concentrate annually from the CV5 deposit.

The all-in sustaining cost was estimated at $US597/t, which is competitive enough for lithium, particularly in today’s US$2,400/t market and long-range forecasts prices of around the US$1,500/t mark.

But the feasibility study did not count in the by-product potential of tantalum and caesium to further enhance the cost of production for Shaaki’s main game of lithium production. It was a lithium-only study.

The by-product potential of the tantalum will get an airing in a planned update of the feasibility study – it was akin to a definitive feasibility – this October while the caesium potential will be covered off in a PEA/coping study because CV13 is separate to the CV5 deposit.

The by-product impact of both could be seriously meaningful.

No calls on the impact out there just yet but PMET’s executive chairman Kin Brinsden of former Pilbara Minerals fame was on hand in Montreal during the week to give a feel for the emerging by-product advantage for Shaaki.

“We’re going to get a very strong credit for caesium,” Brinsden said. “We’re going to get a very strong credit for tantalum, and that’s going to make our spodumene very, very cheap.

“Ultimately we’re still a lithium mine, but we are unique now because of these co- products.”

The caesium market is not a big one.

But it doesn’t have to be to make a difference at Shaaki because of its high value.

It takes ten tons of 10% pollucite concentrate to make one tonne of caesium carbonate which fetches US$150,000-US$US200,000/t (posted spot prices for small sales are higher still).

And get this, the only existing production of note is from a mine in Canada and Zimbabwe, both of which are controlled by a Chinese company. Talk about being critical/strategic when caesium’s main use in controlling pressures in oil wells is on the up and up thanks to the increased global oil exploration effort in the wake of the war in Iran.

Caesium is also plugged in to the solar panel boom thanks to a technology using caesium which enhances the PV performance. But one of the things holding back the technology is the scarcity of caesium.

Shaaki could be the fix.