Chris Temple Discusses Geopolitical Updates from Ecuador and what it means for Mining

Trevor Hall Hey welcome, to Mining Stock Daily, this is Trevor Hall. Thank you for tuning in. We have a little bit of a different type of week and a half coming down your way. I'm actually heading out of town, although I have a number of corporate and editorial updates that I will be sharing throughout the next week and a half. So the content and the information will still be coming your way, into your inbox and podcast network so you listen to this content. Thank you so much for always tuning in. If you have any feedback or questions feel free to drop me an email Trevor@clearcreekdigital.com.

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Joining me today is Mr. Chris Temple from The National Investor. Chris, it's good to have you back on the show. Today we have a very special topic and that is all things geopolitical events happening in Ecuador, which has seemed to have changed by a day-by-day basis throughout the weekend. I know you follow this pretty well and also we're going to talk about some of the miners and explorers in that country within that jurisdiction. But Chris, for listeners can you please give us a quick update of what has led to the cancellation of the disputed austerity package and it looks like the protests in Ecuador have come to a standstill for the time being.

Chris Temple Well sure. For time's sake Trevor, I trust you won't mind. I'll tell people to look at my website, nationalinvestor.com, where I wrote extensively over these last two weeks about what was going on and what gave rise to this--well, I'll stick to the Cliff's Notes version for right now. Early this year, President Moreno got together with Christine Lagarde at the World Economic Forum and they mugged for the cameras and shook hands and so forth. And at that point, according to Moreno's detractors in Ecuador, which is roughly four out of five people these days, he essentially agreed to a deal to roll over some debt, borrow some more money from the IMF and in return for that as the IMF always does--we're seeing this in Argentina now, they put a country from the frying pan into the fire. And what was asked of Moreno in Ecuador was to pass a series of austerity measures so as the country could better be able to make its interest payments to the IMF, one of those was the repeal of a fuel subsidy that's been around for a very very long time in that country. And it's one, Trevor, that literally is the difference between the average poor household and rural household and indigenous household in Ecuador, being able to eke by in a meager existence or not because fuel prices went up. That raised the cost of a lot of other things as a follow-on including food and you know this this is not a step that Moreno necessarily had to take. There's other things of a good nature that he's been trying to do down there for business. But what this did was it galvanized the idea in many many people's minds in Ecuador that even though Moreno ran as a populist and someone who would promise to carry forward the tradition of the citizen's revolution of his predecessor Rafael Correa, he instead lurched to the other side very much the way in which you know Bill Clinton became hated in the United States here by true progressives who voted for him thinking they were getting a ideological progressive or liberal and instead they got a Wall Street guy who locked up more minorities and passed welfare reform and did the rest of this stuff. So Moreno did that in Ecuador. Frankly, he is taking a good situation, a relatively good situation he inherited and really hurt himself and what little political capital he has left right now to the point whereas we all saw, this led to riots that led to all kinds of bad stuff. Horrible thing to see in Ecuador which is a beautiful country that I love. And finally, late last night, Moreno meeting with the head of the indigenous groups down there agreed to basically go back on what he said he was going to do as well as to go back on those austerity measures. So for all practical purposes, this initiative has been rescinded. He said it would be replaced by something that would be more targeted as ways to save money that won't affect the poor as much. But we're waiting for the details.

Trevor Hall Chris, do you think this changes Ecuador leaving OPEC or do you think that still stands?

Chris Temple Well no and frankly that is one of the better things that Moreno's Administration announced recently and something that's necessary. I mean they have a lot of undeveloped resources still in that country. They don't want to be hamstrung by OPEC's quotas. The country does need to increase its revenues and its exports. So this shouldn't change that. But where Moreno hurt himself with this whole thing and I need to point out and I'm glad you brought up OPEC, Trevor, because the potential new concessions at play in Ecuador for resource extraction are double for energy compared to what they are for mining. But disproportionately, those energy related concessions and potential concessions are in the eastern part of the country where there's been past problems with environmental degradation. An old Texaco case that still rubs people raw in that country and recently especially when on the mining issue, the indigenous people spectacularly lost in court in their legal efforts to try and stop legal mining in that country. You can argue that Moreno now is going to have to make some concessions to at least stop new concession granting to any of the extractive industries if they're anywhere near these Aboriginal lands. That was a battle that he had largely won on behalf of the country that now is unfortunately back in play because of what he just did.

Trevor Hall So it seems like we are back and similar to what the United States is into with this quote unquote trade agreement with China. We don't have anything on paper yet. So we'll see how the cards are handed here in the next few days or weeks. But I'm glad you did bring up mining. Does this--you know with the number of eyes as a jurisdiction Ecuador is right now for mining and mineral exploration. Does this at all ease any of that jurisdictional risk for the time being or do you think investors still need to be weary where they put their money in Ecuador?

Chris Temple I would address it quite differently Trevor. The jurisdictional risk for Ecuador had been all but eliminated some time ago. The icing on the cake was a Constitutional Court's verdict last month in September, on a case where some of the NGOs and others were trying to shut down legal mining. They got shut down in far more spectacular and emphatic fashion than all of us watching it thought they were of a mind to do, which is good. Furthermore, the government generally speaking has been very supportive in this respect even though he's not liked by a lot of the people who are poor and indigenous folks and stuff, Moreno has been, if you look strictly at mining, a very pleasant surprise in general terms. What has happened now, in my opinion, as a result of this battle that he just caused and he's blaming--you know it sounds to me like the Democrat Party is saying it's Russia's fault Trump is president. Moreno did something and blames his predecessor Rafael Correa, Venezuela's President Maduro and others for all this problem. Were there instigators that came out from outside or with different agendas that made these protests worse? Undoubtedly. But who started it? And it was him. So what he has done now is given the indigenous folks some renewed publicity, some renewed legal momentum and the least that I expect personally to see out of this, is that the timetable that had seemingly been in place for new concessions for mining to be opened up, I'll be shocked if that is not postponed again. I don't see any danger to anything going on there now because it has still become that over the last several years, a very pro-mining government and pro-mining tax and economic structure down there. But he has given some life back to the opponents of mining who had been all but defeated prior to picking this other fight, one that he got in over his head.

Trevor Hall Just goes to show you just how important that social license to operate really is no matter.

Chris Temple Absolutely.

Trevor Hall No matter where you are in the mining cycle from exploration to production. Chris, thank you so much for your time. And quickly, can you give our listeners an idea of where to reach you and maybe looking to a subscription to The National Investor.

Chris Temple Sure, simply go to nationalinvestor.com.

Trevor Hall Alright thank you, Chris. Have yourself a wonderful day.

Chris Temple You too.