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Regulation for the assignment and transfer of mining rights of ENAMI EP concessions

Through Resolution No. 118 ENAMI EP - 2017, published in Official Gazette No. 134 of December 5, 2017, the General Manager of the National Mining Company ENAMI EP (hereinafter the "ENAMI"), issued the Regulation for the assignment and transfer of rights of the mining concessions held by ENAMI.
The purpose of this Resolution is to establish the pre-contractual internal procedures for the assignment and transfer of rights of mining concessions until the subscription and registration of the respective contract.
The scope of application and enforcement rests with all the employees of ENAMI. Likewise, it applies to all natural or legal persons, national or foreign, public, mixed or private that intervene in the processes of transfer and transfer of rights of the mining concessions.
Benefits of the Process

Among the benefits posed by this Regulation, are the following:
a) Local entrepreneurship: takes into account the local initiative of associative or commercial groups.
b) Maximization of benefits: maximizes the economic and non-economic benefits of the Ecuadorian State.
c) Mining development: development of geological knowledge of mining concessions and seeks greater benefits and better social and environmental practices.
d) Social contribution: contribution to the communities and areas of influence of the projects and contributes to the development of the project through harmonious relationships.
e) Good environmental management practices: better technical, social, labor and environmental management alternatives for the development of the project.
Types of Processes
Two types of processes are established for the assignment and transfer of rights of mining concessions. The first process is through a direct invitation from ENAMI to interested parties for (i) small mining concessions with mining operation contracts, (ii) concessions from the ENAMI portfolio that are part of associative agreements, strategic alliances or prior contracts, and (iii) concessions for subsidiaries or affiliates of ENAMI.
The second process is the one by which ENAMI, by technical decision, performs public calls for participation in the process. This process is determined for (i) small mining concessions without mining operation contracts, and (ii) those concessions from the ENAMI portfolio that are not part of the associative agreements, strategic alliances or prior contract.
The processes for assignment and transfer of mining concessions can begin in the following manner: i) ex officio by the institution; ii) by request of an interested party; or, c) by existing associative agreements.
Stages of the process
Once the process for assignment and transfer of mining rights has the authorization of the Board of Directors, the Operations Management of ENAMI must prepare the Terms and Conditions for each process. These should contain: general data of the process, information of the concessions, economic, technical, social, environmental, and a technological and knowledge component. All assignment and transfer processes must have a schedule prepared by the ENAMI with terms of time for each stage.
Consecutively, the General Manager of ENAMI issues an administrative resolution to initiate the procedure, approves the Terms and Conditions, forms a Technical Commission for qualification and evaluation, and makes the announcement or invitation to submit bids.
Those interested in participating in the process must submit an official and written Manifestation of Interest. Subsequently, to receive the Terms and Conditions of the procedure for interested parties to prepare their initial offer, they must sign a Confidentiality Agreement between the parties. Later, a term will open for questions, clarifications and answers.
Qualification and Evaluation of Offers
In processes that apply for direct qualification, without negotiation, the initial offer will be considered as definitive. In the processes that include a negotiation, the initial offer will be the one that is presented in response to the Terms and Conditions and will be the starting point for the negotiations.
According to the schedule, the interested parties must present their offers and these are reviewed by ENAMI, and it may request validation of errors or additional information, without the possibility of submitting information that modifies the offer.
When the process requires negotiation, the technical commission evaluates the initial offers based on the Terms and Conditions and will make a report determining the bidders that move to the negotiation stage. In processes that do not require negotiation, the commission also evaluates and qualifies based on the Terms and Conditions and a report establishes the winning bidder.
Negotiation process
For the negotiation process a negotiation commission is created which will communicate to the bidders the intention to start negotiations according to a structure and schedule. The bidders will present a team with full power to negotiate. The negotiation meetings will be executed according to the schedule and will be recorded, and the negotiation period may be extended in case the commission deems it necessary. The process may be suspended temporarily or definitively at the request of the parties for established reasons and resumed when the schedule has not been finalized. When the process is definitively suspended, the process may be filed and be declared void. If there are more than two bidders, ENAMI will compare the economic benefits, if necessary by Swiss Challenge.
Winning Offer Statement
Once the negotiation process takes place, and after a report from the evaluation committee and the qualifying committee, the winning bid will be declared by means of a notification to the winning bidder and the Ministry of Mining.
The Ministry of Mining, following a report from the Mining Regulation and Control Agency and at the request of the winning bidder, will assess the suitability of the transferee and authorize the assignment or transfer of mining rights as established by the Mining Law and its Regulations.
Procedure for Small Mining
Regarding the process of assignment and transfer for small mining in mining operation contracts, the aforementioned steps must be followed. However, there must be a direct invitation to mining operators that have fulfilled their contractual and regulatory obligations, so they present their Manifestation of Interest to participate in the process; and there will be no negotiation stage.
In the event that the small mining concessions do not have mining operation contracts, the assignment or transfer must be carried out in compliance with the steps mentioned above (preliminary and substantiation stages). However, there must be a public announcement and a negotiation stage.
Procedure for Portfolio Concessions
In relation to the assignment and transfer of concessions in the ENAMI portfolio that are part of prior agreements, strategic alliances or previous contracts, the preliminary and substantiation stages must be complied with. In this case there will be a direct invitation to the associates to present their Manifestation of Interest in participating in the process. Also, there will be a negotiation stage.
In relation to the concessions in the portfolio of ENAMI that are not part of associative agreements or strategic alliances or prior contracts, the stages mentioned in the previous paragraph must be followed, with the difference that there will be a public announcement, to subsequently enter the negotiation stage.
Procedure for subsidiaries or subsidiaries of ENAMI
For concessions destined to subsidiary companies or affiliates of ENAMI, it will be carried out directly without any process, as long as it has the prior favorable reports issued by the technical, financial, environmental and legal units, by means of a single report from the General Manager of ENAMI and authorization from the Board of Directors. In case of not considering it viable, ENAMI will make a public announcement according to the regular process.
Assignment and Transfer Contract
Once the aforementioned has been complied with, the ENAMI, jointly with the winner of the process, with prior authorization from the Ministry of Mining and the issuance of the corresponding guarantees, will sign the contract of assignment and transfer of the mining rights of the concessions.







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©2018 Andrade Veloz Abogados.
Todos los derechos reservados
©2018 Andrade Veloz Abogados
Todos los derechos reservados