Trilliant Exploration Corporation
10-K












WITNESSETH:
  WHEREAS,that the present
      juridical framework, is insufficient and it does not respond to the
      interests of the nation, for this reason, it is necessary to correct and
      stop environmental, social and cultural damage by means of safe and
      efficientregulations, in accordance to the new model of development wished by the
      Country.
  Whereas,the Constitution of the Republic
      of Ecuador, in Art. 408 establishes that "Non-renewable natural
      resources,  and in general, sub-soil products, mineral deposits
      andhydrocarbons, and
      substances obtained from sources different from soil, including those
      found in the areas covered by the waters of the territorial sea and
      maritime zones, as well as the biodiversity and the genetic heritage and
      radio-electric spectrum are inalienable and
      non-prescriptible property of the
State".
  WHEREAS,non-renewable natural resources
      are considered a strategic sector, as set forth in the Constitution in
      Art. 313, this way, the State reserves for itself the right to administer,
      control,regulate and
      manage  the strategic areas, according to the principles of
      environmental sustainibility, caution, prevention and efficiency; as well
      as to delegate the private initiative, pursuant to Art. 316 of the
      Constitution of the Republic of
Ecuador.
  WHEREAS,"The State recognizes diverse
      forms of organization of production in the economy, and they are
      communitarian, cooperative, enterprise, public or private, associative,
      familial, domestic, autonomous and mixed", as provided in the Constitution
      of theRepublic of
      Ecuador in Art. 319.
  WHEREAS,the State shall
      promote a better quality of life of the population, and it shall
      incentivize those ways of production that preserve its rights and respect
      to nature
  WHEREAS,the State shall
      guarantee the right towork, recognizing any and kinds
      of work, in a state of dependency or autonomy including those of self
      sustenance and human care as social productive factors to all workers of
      any gender.
  WHEREAS,the State shall promote the
      development of economic activities by means of juridical order
      and political institutions that promote, foment and defend them, through
      the accomplishment of the Constitution andthe Law.
  WHEREAS,"The State shall avoid the
      concentration or monopoly of diverse forms of organization ofproduction, promoting its
      redistribution and eliminating privileges or discrimination in their
      access," as provided in the Constitution of the Republic of Ecuador in
      Art. 334.
  WHEREAS,the State shall promote and
      support the development and diffusion ofknowledge and technologies aimed
      to improve processes of
production.
  WHEREAS,MunicipalGovernments shall regulate and
      control the exploitation of arid and petrified materials, found at the
      bottom of rivers, lakes, lagoons, sea beaches and
      quarries.
  WHEREAS,the Constitution of the Republic
      of Ecuador in Art. 395,  sets forth that "the State shall
      guarantee a sustainable pattern of development, environmentally balanced
      and respectful of the cultural diversity, which preserves the
      biodiversity, the capacityof natural regeneration of
      ecosystems and ensure the satisfaction of the necessities of present and
      future generations,"
   1
  ISSUES THIS
  MINING LAW
  Title I
  BASIC PROVISIONS
  Chapter I
  GENERAL RULES
  Art.
1.-  Purpose of this Law.-This Mining Law regulates
theexercise of the
sovereign  rights of the Ecuadorian State, in order toadminister, regulate, control and manage the
strategic mining sector, pursuant to the principles ofsustainability, caution, prevention and efficiency.
Oil and other hydrocarbons are exempted from this
Law.
  The State shall delegate its
participation in the mining sector, to mixed mining companies which have a
majority of capital shares, or to private initiative and to popular and mutually
binding economy, for the prospection, exploration and exploitation, or processing,
smelting and refining, as the case may be, in addition to local or international
trade of mineral substances.
  Art. 2.- Extent of
application.-In order to
regulate the previous  article, the Mining Law hereto
establishes norms for the
relations of the State with mixed-economy miningcompanies; naturalpersons and legal bodies, foreign or
national, public, mixed , private, , and the ones among themselves, in
connection with the obtaining and termination of  mining
rightsand the performance
of mining activities.
  Art. 3.- Residuary
rules.-They are applicable
in mining affairs, in the relation State-particular people, and among them, the
regulation: Administrative, Contentious-Administrative; food sovereignty; tax,
penal, penal processing;
public companies, associations, civil, civil processing, of decentralized
autonomousgovernments, cultural heritage and more regulations
governing the Ecuadorian legislation applicable on mining-geologic sector, in
all the correspondingaspects and which are not  expressly regulated by the Law
hereto.
  Chapter II
  FORMULATION, EXECUTION, AND
ADMINISTRATION OF MINING POLICY
  Art.4. -Definition and
direction of mining policy. -The definition and direction of the
mining policy of the Statecorresponds to the President of the Republic of Ecuador.
  For the development of said policy, its
execution and application, the State shall act by means of the relevant Ministry
and the entities and organisms determined in this Law.
  The State shall administer, control and regulate the
development of mining industry, prioritizing the sustainable development and the
fomentation of social participation.
  Art.5. -Institutionalstructure.
-The mining sector shall be structured as
follows:
  a)
              The relevantMinistry;
  b)
              Directorate of the Agency of
      Mining Regulation and
Control;
  c)
              The National Institute of
      Geological and Mining Metallurgic Research;
  and,
   2
  d)
              The National Mining
      Company.
  e)
              The Municipalities in their
      corresponding competence
  Art. 6. - The
Relevant Ministry. -Defined by the Presidency
of the Republic, that is the main and planning authority of the mining sector.
Said authority is in charge of the establishment of policies, guidelines and
applicable plans in the corresponding areas for the development of this field,
according to the Constitution and the Law, its regulations and the plans of
development established at a national level.
  The State shall determine, in accordance
to Art. 279 of the valid Constitution and according to principles of
decent life, as well as
those of the economic, environmental, social and cultural necessities, the areas
susceptible to mining exploration and exploitation, prioritizing the
rationalization of the use of natural resources, the generation of new areas of
development and the principle of regional
balance.
  National Mining Policies shall promote
at all levels the innovation, technology and research that allow an local
development of the area, for this process the relevant Ministry shall coordinate
with the institutions of
science, technology and high studies in the country.
  The State shall establish mechanisms of
fomentation, technicalassistance, training and financing towards a
sustainabledevelopmentof small scale and artisan
mining.  Likewise, it shall establish systems of incentives for
environmental protection and generation of productive and more efficient
units.
  Art. 7. - Competence
of the Relevant Ministry. -The Relevant Ministry is in charge
of:
  a)
              To direct the public policies of
      the geologic-mining area, the issuance of agreements and administrative
      resolutions required in its
management
  b)
              To represent the State in affairs
      of mining policy;
  c)
              Evaluate policies, plans and
      projects for the development, administration, regulation and management of
      the mining sector;
  d)
              To execute, in a decentralized
      way, the defined public policy for the development of the
      sector;
  e)
              Promote, in coordination with the
      public and/or private Universities and Polytechnic Schools, the scientific
      and technological research on the mining
  field;
  f)
              To define, in coordination with
      the entity in charge of national planning, the National Plan of
      Development of the mining
sector;
  g)
              To supervise the accomplishment of
      objectives, policies and set goals in the mining area and performed by
      natural persons and legal bodies public and/or
    private;
  h)
              To set forth the parameters and
      markers for the follow-up, supervision and evaluation of the management of
      the public companies and inform the Executive branch about the results of
      such execution and
measurement;
  i)
              To create the Consultative
      Councils which allow the participation of citizens for the making of
      decisions on mining
policies;
  j)
              To grant, administer, and
      terminate mining rights;
and,
  k)
              The others set forth in executive
      laws and decrees in force, as well as in the Regulation of this Law;
      Art.
   3
  Art. 8.-The Agency of
Mining Regulation and Control.-It is the technical and administrative
authority in charge of the administration of the exercise of the state
surveillance, auditory, intervention and control of the stages of mining
activity performed by the  National Mining Company, mixed in
conformity with the Law hereto and its Regulations.
  The Agency of Mining Regulation and
Control, an institution of public right, with legal capacity, administrative autonomy , technical,
economic, financial and its own assets, it is attached to relevant Ministry and
it has competence to supervise and adopt administrative actions that assist the
rational andtechnicaldevelopment of the mining
resource, for a fair share
of the profits that correspond to the State, as a result of its exploitation,
and in addition, to the accomplishment of theobligationsof social and environmentalresponsibilityassume the title holders of mining
rights.
  Art. 9. -
Attributions of the Agency of Mining Regulation and Control:
  a)
              To ensure correct application of
      presentLaw,
      andthe correct
      application of legal dispositions in mining
  matters;
  b)
              To issue regulations and technical
      plans for a correct functioning and development of this sector, in
      accordance to the Law
hereto;
  c)
              To issue reports for the granting,
      preservation and termination of mining concessions, of authorization for
      the installation and operation of processing plants , smelters,
      refineries, and the celebration of exploitation contracts,
      by the relevant Ministry;
  d)
              To keep a register and a
      geological mapping database of the mining concessions and publish it
      through electronic and digital
means;
  e)
              To be informed of, and resolve the
      appeals brought in connection to the resolutions issued by
      the decentralized units;
  f)
              To be informed of, and , resolve,
      in the processes of administrative
  protection;
  g)
              To inspect mining activities
      performed by title holders of mining
  rights;
  h)
              Tosurveythat in mining activities executed by the holders of
      mining rights, no children or adolescents work or labor, according to Art.
      43 of the Constitution of the
Republic.
  i)
              To sanction according to the Law
      hereto and its Regulation to mining title holders, if from the
      inspectionreferred
      to in item h) it would be detected the presence of children or adolescents
      working, and to report it to the Inspectorates of Child Work and other
      entities in charge of investigating and y sanctioning according to
      the  Law.
  j)
              To designate anintervenerin the cases provided by
      Law.
  k)
              To regulate the concession rights
      in the mining sector according to this Law and its regulations, as well as
      to collect the corresponding amounts offines andpenalties;
  l)
              Toexercise thetechnical control and
      apply penalties to
      ensure the correct application of the policies and regulations of the
      sector;
  m)
              To open, substantiate and decide
      the proceedingsdestinedto the imposition of the
      penalties set forth in this
Law;
  n)
              To watch, evaluate and divulge the
      markettrends and the
      statistics of the mining
area;
  o)
              To issue licenses for trading of
      mineral substances set forth in this Law;
  and,
  p)
              The others that correspond
      according to this Law and its
  regulations;
   4
  The Bylaw of the Agency of Regulation
and Control shall determine
the competence of the Regional Agencies, within the framework of the
attributions contained in the Law hereto.
  Art. 10.-National
Institute of Geological, Mining, Metallurgical Research.-Create the National Institute of
Geological, Mining, Metallurgical Research inaccordance to the norms of article 386
of the Constitution of the Republic of Ecuadoras a public institution in charge of
performing activities of research, technological development and innovation on
the field of Geology, Mining and Metallurgy.
  The National Geological Research Agency
is created, it is a specialized authorityof the relevant Ministry in charge of
generating, systematizing and managing the geologicalinformation all over the national
territory, in order to promote the sustainable development of mineral
resources, prevent the incidence of geological  threats, and those
provoked by man, and support territorial regulation.
  The organization and functioning of this
Institute, has to conformtothe dispositionsof thisLawand its
Regulations.
  Art. 11. -Directorate of the
Agency of Mining Regulation andControl.
-The Agency of Mining Regulation and
Control shall have a Directorate formed by three members with no dependence link
to this entity. It shall be formed by two main members and their respective
deputies, who need to be knowledgeable technicians on the subject, appointed by
the President of the Republic, and the relevant Minister or his permanent
delegate and his respective deputy, who shall hold the Presidency ofthe Directorate.
  The Directorate shall appoint an
Executive Director and it shall establish the best administrative and financial
structure for a correct functioning, and the attributions of its
officers.
  Art. 12.- National
Mining Company.-It is a societyof public right with legal capacity, own
assets, with autonomy for its budget, finance, economy and administration,
destined to the management of mining activity for a sustainable development of
the resources subject matter of this Law, pursuant to its provisions andRegulations. TheNational Mining Company It is a society
of public right with legal capacity, own assets, with autonomy for its budget,
finance, economy and administration, destined to the management of mining
activity for a sustainable development of the resources subject matter of
this Law, pursuant to its and Regulations. The Public Mining Company is subject
to the regulation and specific control established en Public Company Act, it has
to work displaying parameters of quality and enterprising, economic, social and environmental
criterion.
  Art. 13. -Administrative
Systems.-The
public officers and employees who labor in the entities and organisms created
under this Law, shall be subject to the Organic Civil Service andAdministrativeCareer Law, and also to the Unification and
Homologation from the public sector, exempting The National Mining Company,
which shall be self regulated according to the Constitution of the
Republic.
  Art. 14.-
Jurisdiction and venue.-All national persons or legal entities, local or foreign who hold
titles of mining rights or perform mining activities, are submitted to laws,
judges and law courts in the country. In the case of foreign natural people and
legal entities, it is implied that they shall be subject tothe terms of Art.442 of the
Constitution of the Republic.
  Art. 15. -Public
interest. -Mining is hereby declared as public
interest in all its stages, inside and outside of the mining
concessions.  Therefore, any necessary rights of way shall be
established pursuant to the
Law hereof, taking into account the prohibition and exemption items set forth in
Art. 407 of the Constitution of the Republic of Ecuador.
  Chapter III
  STATE AUTHORITY AND MINING
RIGHTS
  Art. 16.- Domain of
the State over mines and deposits.-Non-renewable  natural
resources, and in general, sub-soil products, minerals and substances obtained
from sources different from soil, including those found in the areas covered
by
   5
  the waters of the territorial sea, are
inalienable and non-prescriptible property of the State. Said
ownership of the State shall be exercised with independency of the right of
property over surface lands that cover mines and deposits.
  Exploitation of natural resources and
the exercise of mining rights shall meet the principles of sustainable development,
environmental protection, social participation and responsibility, and with
respect for the natural and cultural heritage of the exploited zones. Their
rational exploration and exploitation shall be performed in function of the national interests, by natural
persons or legal bodies, public companies, mixed or private, local or foreign,
granting mining rights, pursuant to this Law.
  Exploration and exploitation of mining
resources shall be based on a public environmental sustainability strategy that shall
prioritize the audit, inspection, regulation and prevention of contamination, as
well as the promotion of social participation and citizen surveillance
committees.
  Either
direct exploitation agreements or auctions for mining concessions shall only be
performed in those areas defined in the National Plan of Territorial
Development.
  Art. 17.- Mining
Rights.-Mining rights are those stemmed from the
titles of mining concessions of exploration and exploitation, licenses
andpermits, as well as the
authorizations to install and operate processing, smelting and refining plants,
and from tradelicenses.
  Chapter IV
  SUBJECTSOF MINING LAW
  Art. 18. -Subjects
ofminingright.-The subjects of mining right
are, natural persons having
full legal capacity and legal entities, local or foreign, public, mixed or
private, communitarian or self-managed, whose business purpose and function are
in conformity with the legal dispositions in force of the
country.
  Art.19. -Domicile
of foreigners.-Foreign natural persons or
legal entities, in order to be owners of mining rights, must be domiciled in the
national territory, and they shall receive the same treatment granted to any
other national natural person or local legal body.
  Art. 20.-Ineligible
persons.-Any
party who has conflicts of interest or may make use of privileged information,
such as:natural persons or
legal bodies related to organisms of decision of the mining activity, either
through a direct participation or  their shareholders and relatives in a fourth
degree of consanguinity and second of affinity or former officers of the
ministry of natural resources, ministry of energy and mines or
their  immediate relatives of up to fourth degree of consanguinity and
second of affinity  and natural or juridical
persons related to the institutions in charge of taking decisions in the mining
sector, described in Title IV "contracts" Chapter I " of the capacities,
inabilities or nullities" from the Organic Law of the National System
ofPublic Contracting, among
others.
  Chapter V
  MINING ACTIVITY
  Art. 21. -National Mining
Activity. -It is developed by means of public
companies, of mixed economy or private, communitarian, associative and familial
business, of self management or naturalpersons, in accordance to this Law. The
State performs its mining activities through the National Mining Company, and it
is entitled to incorporate mixed economy companies. Mining activities developed
by public companies, of mixed and private economy andnaturalpersonsenjoy the same corresponding guarantees
and they deserve state protection, asestablishedby the Constitution and the Law
hereto.
  Art. 22. -Juridical Regime of
the National Mining Company and the private concessionaires.-The obtaining andthe exercise of mining rights from the
National Mining Company shall be subject to the juridical regime established in
this
   6
  Law and in accordance to article 316 of
the Constitution in force. Likewise, private concessionaires involved in it
shall also be subject to
the provisions of this Law and to the common applicable juridical regulations on
national investment and the development of productive activities in the
country.
  Art. 23. -Theintervenerin mining
activities. -Theintervenershall be appointedby the Agency of Regulation and Control,
an officer who is not under investigation in the event there is a claim in
written from an affected party or by a legal processing, and it is proved that
the concessionaire did not comply with the legal provisionsand other statutes that regulate the
mining sector, and that these violations might
generate prejudice to the partners, shareholders or third
parties.
  The Agency of Regulation and Control, in
the administrative act which appoints theintervener, shall establish the operations and documents that
require his approval and signing. Unless otherwise agreed, the functions of theintervenershall be confined to making an exact
account of the products, machinery and expenses of the concessionaire in order
to present it timely and
duly supported; he shall bein chargeof the effective supervision of the
works; and he shall enforce the accomplishments of the dutiesto allthe personnel, administrative and in
the field.
  The wages earned by theintervener, shall be determined by the Agency of Regulation and
Control, thepaymentshall be in charge of the title holder
of mining rights through this Regulating Organ.
  If the claim of theintervenerwere groundless, the Agency of
Regulation and Control shall reject it and it shall administratively and civilly punish
determined in this Law, withoutprejudiceof penalsanctionsset forth in its respective legal
body.
  Chapter VI
  SPECIAL MINING ZONES AND FAVORABLE
ADMINISTRATIVE ACTS
  Art. 24. -Special Mining
Zones.
-The President of the Republic has the authority to
declare Special Mining Areas, subject to Art. 407 of the Constitution of the
Republic, to those which show a mining development potential and are not under
concession, with the purpose that the relevant Ministry through their agencies perform inventories,
geological-mining research or other type of activities with scientific interest,
within their respective competence. The declaration of a Special Mining Area
shall be expressly established during the term of its validlife, whichcannotbe of over four years; once this term
is expired it shall be rescinded, without a special disposition that declares
it. In any case, the declaration shall respect the legally established rights or
those stemmed from them.No mining concession shall be assigned on said areas
during the term of their validity.
  During the following four years starting
on the date of expiration of the valid life of a Special Mining Area, the
National Mining Company shall have a preferential right to requestmining concessions in said area.
Likewise, if during said four year term, a third party requests a mining
concession which comprises totally or partially lands that have comprised said
Special Mining Area, the National Mining Company shall have a
preferential right to grant mining concessions in
said area. The Agency of
Mining Regulation and Control shall work on the proceeding for the exercise of
the preferential right in the terms, conditions and time set forth in the
General Regulation under this Law.
  Mining areas and projects where the
Ecuadorian State has performed a prospection and exploration and studies of
pre-feasibility or feasibility, shall be restituted to it.
  Art. 25. -Protected
areas.
-Extracting activities of
non renewable resources in protected areas is forbidden.
Exceptionally, said resources shall be exploited under a fair grounding petitionof the Presidency of the
Republic, and after a declaration of nationalinterest bythe National Assembly in accordance to
Art. 407 of the Constitution of the Republic of
Ecuador
  Art. 26.- Previous
Administrative Acts.-To
carry on mining activities mentioned in the following chapter, in the places set
forth as follows, previously delivered favorable administrative acts with a fair
grounding are obligatorily
required by the following authorities and institutions, as the case may
be:
   7
 
 a)
                In all these cases, the approval
      of the Study of Environmental Impact by the Ministry of Environment and
      the report of the damage to environmental areas is
      required.
 b)
              From the Municipal Council, within
      urban zones and according to the territorial regulation and the plan of
      economic social cantonal
development;
  c)
              From the Ministry of Transport and
      Public Work, with relation to buildings, public roads, railways, lifts
      and, provincial
      councils in case of bridlepaths;
  d)
              From the National
      Secretary ́s Office ofbroadcastingwith relation to radio stations,
      antennas andbroadcastinginstallations;
  e)
              From the Ministry of Defense,
      within areas or military installations or inadjoining lands, of places used
      as magazines for explosive or inflammable material; and within zones
      located on theofficialborderlines of the country and in
      licensed seaports, sea beaches or ocean
  bottoms;
  f)
              From relevant Authority of Water
      in any bodyof water,
      such as lakes, lagoons, rivers or dams or in adjoining areas to those
      reserved for the capture of water for human consumption or irrigation, in
      conformity with the Law that regulates hydric resources. The present
      administrative act shall be donein compliance of the Political
      Constitution of Ecuador regarding the order of prevalence over the Right
      of access to Water;
  g)
              From the National Directorate of
      Hydrocarbons with relation to oil, gas and petroleum product pipelines,
      refineries and other oil
      installations;
  h)
              From the Directorate of Civil
      Aviation, with relation to airports or runways or on their adjoining
      lands;
  i)
              From the Ministry of Electricity
      and Renewable Sources, in areas in which there are power stations, pylons
      and main lines of the
      National Network; and,
  j)
              Mandatorily,From the National Institute of
      Cultural Heritage in case the zone of mining prospection may have
      archaeological traces or of natural and cultural
      heritage.
  Distances and other technical and
environmental requirements
for said Administrative Acts shall be established in accordance with the
criterion set forth in the respective regulations issued by relevant
administrative authorities in each case.
  These administrative acts shall be
issued within a maximum period of sixty days from the date of the petition,
they shall be under the responsibility of theofficialin charge of issuing administrative
acts, and they shall contain conditions that protect the interest of each
institution and the rights and guarantees of the citizens. Authorities and institutions in
charge of issuing administrative acts, shall not issue additional administrative
acts to extend the deadline for their pronouncement.
  In case theauthoritiesand institutions before mentioned issue
non favorable administrative acts, the mining concession
holder has the option to appeal said resolution before the relevant Minister,
who shall issue his resolution in a motivated way, except in the case of the
provision set forth in item
f) which shall be appealed judicially.
  Chapter VII
  STAGES OF MINING
ACTIVITY
  Art. 27. -Phases of
Mining Activity. -For the purpose of applying this Law,
the phases of mining activity are:
  a)
              Prospecting, which consists of the
      search of traces of new mineralized
  areas;
   8
  b)
              Exploration, which consists of determining
      the size and form of the deposit, as well as the content and quality of
      the mineral present in it. The exploration can be initial or advanced, and
      it also includes the economic evaluation of the deposit, its technical
      feasibility and the design of its
      exploitation;
  c)
              Exploitation, which comprises the
      group of operations, works and mining labor devoted to the preparation and
      development of the deposit and the extraction and transport of
      minerals;
  d)
              Ore processing, whichconsists in a set of physic,
      chemical and/or metallurgic processes that the ore
      mineral  product of the exploitation go through with the purpose
      to raise the ore grade;
  e)
              Smelting, which consists in the
      process of fusion of minerals, concentrate or precipitated from them, with the purpose
      to separate the ore metal wished, from other minerals that come
      along;
  f)
              Refining, which consists in
      technical procedures aimed to convert the metallic products into metals of
      high purity;
  g)
              Trading, which consists ofthe buying and
      selling of minerals or the celebration of other contracts whose object is
      the negotiation of any product resulting from mining activity;
      and,
  h)
              Mine Closure, which consists of
      the end of mining activities and the subsequent dismantling ofthe installations
      used in any of the previously referred stages, including environmental
      repair in accordance to the plan of closure duly approved by the relevant
      environmental authority.
  The State shall foment the
industrialization of ore minerals productof the activities of exploitation,
promoting the incorporation of the added value with maximumefficiency, respecting thebiophysicslimits of nature.
  All stages of mining activity imply the
obligation to apply a process of environmental reparation and remedy in accordance to the Constitution
of the Republic of Ecuador and its regulations.
  Title II
  MINING RIGHTS
  Chapter I
  PROSPECTING
  Art. 28.- Freedom of
prospecting.-Any naturalpersonorlegal body, national or foreign, public, of mixed
or private economy,
communitarian and of self management, except those pronounced forbidden by the
Constitution of the Republic and this Law, have the right to prospect freely,
with the purpose to find mineral substances, except in those areas comprised
within the boundaries of mining concessions, in urban
zones, populated areas, archaeological sites, goods declared of public service
and Special Mining Areas. When the case presents itself, they must obtain thefavorableadministrative acts referred to in
Article 26 of thisLaw.
  Chapter II
  MINING CONCESSION
  Art. 29. -Auction sale and
public sale for the delivery of mining
concession.-The relevant Ministry shall notice to a
public auction for the delivery of any metallic mining concession. Likewise, it
shall present a notice for
a public auction for the granting of any mining areas of expired concessions or
those returned or reverted to the State, where applicants shall participate and
present their respective offers according to the proceeding established by the
GeneralRegulation of this
Law.
   9
  In theannualandmultiannualplanning by the relevant Ministry, it
must containdifferentiatedsusceptible areas of metal mining
concessionsfor small mining, artisanmining andon the other side, large scale
mining.
  At the public auction for small scale mining only
and exclusively natural persons or legalbodiesplaced in these categories, according
to the proceedings and requisites established in this Law and its General
Regulation.
  Natural persons and legal bodies placed
in the category of small
mining or artisan miners under no circumstance shall have foreign companies as
business partners or shareholders.
  Those auctions for mining concessions
shall only be performed in those areas defined in the National Plan of
Development,in the section
of Territorial Organization.
  The General Regulation of this Law shall
establish the procedure for the auction saleand publicsale as well as the requisites and
conditions for their participation.
  Art. 30. - Mining concessions. -The State may exceptionally delegate its participation in the mining
sector through the concessions. A mining concession is an administrative act
which grants a mining title, over which the title holder owes a personal
transferable right, that needs the mandatory qualification of the suitability of
the assignee of said mining rights by the relevant Ministry, and said concession
can be subject to pledge,assignments and other guaranties foreseen by Law, in accordance to the
requisites under the Law hereto and its General Regulation.
  The registration of the transference of
the mining title shall be done by means of the Agency of Mining Regulation and
Control after having received the respective notice from the concessionaire
informing of the assignment of his mining rights, in accordance to the proceeding
and requisites set forth in the General Regulation under this
Law.  Said act shall be authenticated with the registration at the
Mining Registry including a payment fee equivalent to one per cent of the
transaction.
  The State, with the corresponding legalreports shallauthorize the assignment of the mining
title after at least two years of its granting.
  Constructions, installations and other
objects affected permanently linked to mining research, extraction and
processing of ore minerals
are considered accessory property of the concession.
  Legal domicile for tax and company
purposes of title holders of mining rights shall be in the region where the
mining concession is located or the one with larger deposits in case
of concessionaires with
mining titles in different Provinces or the main project of exploitation or
industrialization. This obligation has to be paid at the moment of requesting a
mining concession and it shall not be modified without an express
authorization of the Agency of Mining Regulation
and Control.
  Art. 31.- Delivery of
mining concessions.-Exceptionally, the Stateshalldeliver mining concessions by means of
an administrative act infavorof natural persons or legal entities,
local or foreign, public of
mixed or private economy, communitarian and of self-management, according to the
prescriptions of the Constitution of the Republic, this Law and its General
Regulation.
  The mining titleconfersto its holder the exclusive right to
prospect, explore, exploit,
benefit, smelt, refine and trade all the ore mineral substances which exist and
can be obtained within the area of said concession, becoming a beneficiary of
the economic profit obtained from said process, within the limits set forth in
the regulation hereto and as long as the title is
in good standing, the mining concessionaire can only perform the activities
conferred by these titles after having complied with the requisites set forth in
Art. 26.
  The mining title shall constitute a
title value according to
regulations stipulated bySuperintendenceof Companies and theSuperintendenceof Banks, once the mining deposits
found in the concessionareduly valued by the Agency of Mining
Regulation and Control within the terms of the Regulation of Qualification of Mining Resources and
Reserves.
   10
  The granting of non metallic and quarry
mining concessions shall not be subject to auction or public sale referred to in
this Law, the General Regulation shall establish the proceeding for this
purpose, said proceeding
must include requirements of technical capacity, economic solvency, amounts ofinvestment,
location, area, deadlines
for the development of activities of exploration and exploitation, processing,
socialresponsibility,and destination.
  Business cover or laundering shall be penalized
pursuant to the Penal Code in force.
  Art. 32. -Unit of
measure.
-For the purpose of
applying this Law, the unit of measure for concessions shall be denominated
"mining hectare." This unit of measurement constitutes a volume of pyramidal shape whose vertex is
at the center of the earth; its outside limit is the surface of the earth and it
corresponds planimetrically to a square of 100 meters on each side, measured and
oriented according to the Mercator Transverse Projection system of ruling used by the National
Topographic Map.
  An exception to the above mentioned
rules constitutes the side of a concession placed at international borders
and/or bordering upon beach areas, in whose case the concession limit shall be
the border line, sea
beaches or the protected area limit, as the case may be.
  The mining title is susceptible of
material division or accumulation within the limit of one mining hectare at
least and five thousand mining hectares at most, per
concession.
  Technicalaspects corresponding to shape, size,
relation between minimum and maximum size of the concessions, orientation,
limits, graphics, verifications, positioning, measures, cadastral systems, and
other required by issuance, conservation and extinction of mining rights will be set forth in the
General Regulation under this Law.
  Art. 33. -Rights of
administrative proceeding for concession.-Those interested in obtaining mining
concessions shall pay the amount of five unified basic salaries on account of
fees for each mining
concession application. Such payment will be made only once. Such payment shall
not be reimbursable and it will be deposited in accordance to the provisions of
the General Regulation under this Law.
  No application procedure shall be done
unless the respectivepaymentreceiptisenclosed.
  The procedures which demand further
obligatory administrative acts shall included in the General Regulation under
this Law.
  Art. 34. -Patent of
preservation of concession.-Only and exclusively, until Marchof each year, mining
concessionaires shall pay an annual patent of preservation for each mining
hectare, which shall be valid for one calendar year starting on the effective
date of the payment and the amount shall be fixed according to the scale shown
onthe next paragraph. Under no
circumstance an administrative or judicial deferral for the payment of such
patents shall be granted.
  The patent of conservation from the date
of delivery of the concession until December 31 of the year in which the period
of validity of initial
exploration expires, it shall be equivalent to 2.5 per cent of a unified basic
salary for each mining hectare assigned. This patent of preservation shallrisein a percentage of 5 per cent of a
unified basic salary for each mining hectare assigned for the period of advanced
exploration and the period of economic evaluation of the deposit. During the
exploitation stage theconcessionaireshall pay a patent fee of conservation
equivalent to 10 per cent of a unified basic salary for each mining hectare
assigned.
  The first payment of the total amount
for the preservation patent fee shall be made during the first thirty days
starting from the date of subscription of the mining title and it shall
correspond to the period of time elapsed betweenthe date of delivery of the concession
and December 31st of said year.
  An annual
patent of preservation for small scale mining of two USD (2) American dollars
per mining hectare is established during the stage of initial
exploration.  On the stage of advanced exploration and evaluation, the
fee is
   11
  equivalent
to four USD (4) American dollars per mining hectare, and in the period of
exploitation, for the area declared in commercial production, it shall pay ten
USD (10) American dollars per mininghectare.
  Art. 35. -Dimension of
Concession and Excess.-Each mining concession shall not cover
an area of more than five thousand adjoining mining
hectares.
  If there is a free space between two or
more concessions that does not comprise a “mining hectare”, such free space shall be called an "excess".
This excess will be granted to the adjacent concessionaire who first requests
it.
  The General Regulation of this Law shall
establish the procedure for the procedure for the application and the issuance
of an "excess."
  Art. 36. -Term of validity and
stages of mining concession. -The mining title shall have a valid
term of up to twenty five years; to be renewed for a similar term of time in the
event of a petition in written by the concession holder submitted to the
relevant Ministry, before
the date of expiration, and after having obtained a favorable report from the
Agency of Mining Regulation and Control and the Ministry of
Environment.
  In case the relevant Ministry does not
issue a corresponding resolution in a termof 90 work days from the presentation
of said petition, positive administrative silence shall be produced, in this
case the mining title shall be renewed for ten years whenever warranted by the
circumstances of the contract. Those officials whoseomissionproduced the administrative silence
shall be held administratively, civilly orcriminallyresponsible.
  The mining concession shall be divided
into a stage of exploration and a stage of exploitation. In turn, during the
stage of exploration the period ofinitial exploration, the period of
advanced exploration and the period of economic evaluation of the deposit shall
be distinguished.
  Art. 37. -Stage of exploration
of the mining concession.-Once the mining concession is delivered, the respective title holder shall perform exploration labor in
the area of the concession during a term of four years, which shall constitute
the period of initial exploration.
  Nevertheless, before the expiration of
said period of initial exploration, the mining concessionaireshall have the right to request to the
relevant Ministry a renewal period of up to four years to carry out the period
of advanced exploration, in this case the request shall contain the express
relinquishment to a surface of not less than half the totalextension of the originally delivered
concession.
  The relevant Ministry shall work on said
application processing, provided the miningconcessionairehas complied with the minimum
activities and investments in the area of the mining concession during the
period of initial
exploration.Once saidapplicationis submitted within the terms
previously provided, the relevant Ministry shall issue an administrative
resolution declaring the beginning of the period of advanced exploration.
However, in case the relevant Ministry does not issue the
corresponding resolution in a term of 60 work days from the presentation of the
petition, positive administrative silence shall be produced. Those officials
whoseomissionproduced the administrative silence
shall be held administratively, civilly orcriminallyresponsible.
  When said period of initial exploration
or the period of advanced exploration ends, as the case may be, the mining
concessionaire shall have a period of up to two years to perform the economic
evaluation ofthe deposit
and apply for, before the date of its expiry, the beginning of the stage of
exploitation and the corresponding celebration of the Contract of Mining
Exploitation, in the terms set forth in this Law. The mining title holder has
the right to request to the relevant Ministry an
extension of the period of economic evaluation of the deposit for a term of up
to two years starting from the date of the administrative act of the reception
of said petition, the concessionaire has to pay an annual patentof preservation for the period of
economic evaluation of the deposit, raised in 50 per cent.
  In case the mining concessionaire does
not apply for the beginning of the stage of exploitation in these terms, the
mining concession shall be pronounced terminated by the relevant
Ministry.
   12
  Art. 38. -Presentation of
exploration reports. Until
March 31 of each year and during the valid life of the stage of exploration of
the mining concession, the concessionaire shall submit to the relevant Ministry
an annual report of the
activities and investments on exploration performed on the area of the mining
concession during the last year and a plan of investments for the current year.
These reports shall be submitted duly audited by a qualified professional
certified bythe Agency of Control and Regulation
within the terms of the Regulation of Qualification of Mining Resources and
Reserves.
  In the event the concession holder does
not comply with said plan of investment, he shall be able to avoid the lapsing
of his mining concession by
means of the payment of an economic compensation equivalent to the amount of the
investments not performed, in the event he has performed investments equivalent
to eighty per cent of said minimum investments. The payment of this compensationshall be registered in the annual report
of activities and investments on exploration referred to in this article. These
amounts have to be duly reflected in the general balance and the forms presented
to Internal Revenue Service (Servicio de Rentas Internas).
  The payment of the compensation referred
to in the previous paragraph does not release the concession holder from the
obligation to submit that report.
  Art. 39.- Stage of
exploration of the mining concession.-The mining concession holder has the
right to request at the
relevant Ministry, during the period of validity of the economic evaluation of
the deposit, the advance to the stage of exploitation and the subsequent
celebration of the Contract of Mining Exploitation or a Service Contract
dependingon the rights he is entitled inherent to
the preparation and development of the deposit, as well as the extraction,
transport, ore reduction and trade of its minerals.
  No mining concessionaire shall be
authorized to hold one or more titles which totalize anarea of morethan fivethousand mining hectares at the start
of the stage of exploitation. Notwithstanding the previous clause, the General
Regulation under this Law shall establish technical criterion for the
establishment of areas of protection of mining projects in a stage of
exploitation.
  Said request shall have the minimum
requisites provided in the General Regulation under this law and it must be
attached to a report duly audited by a qualified professional within the terms
of the respective Regulation.Said report has to include the payment
of rights of administrative proceeding and the corresponding patents ofpreservation, as well as the activities and minimum
investments on exploration demanded by Law.
  The relevant Ministry shall request the
mining concession holder
that within a term of thirty days, amplify or supplement the information
enclosed to the request. The information delivered by the mining concession
holder shall be classified as confidential and it shall not be used or revealed
to third parties unless an authorization in
writtenispresented by the title
holder.
  Once said request is submitted within
the terms previously provided, the relevant Ministry shall issue an
administrative resolution declaring the beginning of the period of
exploitation. In case the
relevant Ministry does not issue the corresponding resolution in a term of 60
work days from the presentation of the petition or 30 days from the presentation
of the documents that amplify or supplement the information delivered,
positive administrative silence shall be
produced. Those officials whoseomissionproduced the administrative silence
shall be held administratively, civilly orcriminallyresponsible. In this case, the mining
concessionaire shall have free access to the stageof exploitation directly under the
terms of his own request and the template of the Contract of Mining Exploitation
referred to in articles 40 or 41 of this Law, where the terms for this contract
shall be agreed.
  Notwithstanding the previous clause, in
case that as a result of
the economic evaluation of the deposit the mining concessionaire decides not to
initiate its construction and installation, he has the right to request,
alternatively, to suspend the beginning of the stage of exploitation. This
suspension shall not last more than two
years from the date of the administrative act that contains said request and it
shall grant right to the State to receive an economic compensation equivalent to
one (1) annual unified basic salary for each mining hectareassigned, during the valid period of
the suspension.
   13
  In case the mining concessionaire does
not request to start the stage of exploitation or its suspension under these
terms, the mining concession shall be terminated.
  Chapter III
  CONTRACTING
MODALITIES
  Art. 40.- Service
Contract.-The State,
through the relevant Ministry, can celebrate a Service Contract within the terms
and conditions set forth by the relevant Ministry and those offered by the
contracting party or the concessionaire at the moment of the allocation.
  Similarly, the Service Contracts have to
contain the remuneration of the mining concession holder, and also his
obligations on subjects of environmental management, presentation of guarantees,
relation with the communities, and activities of partial or total closure of the mine.
The template of these contracts shall be approved by the relevant Ministry by
means of a Ministerial Agreement.
  In this case, mining concession holder
is not obliged to pay the royalties established in this Law or the taxes derived from windfall gains.
Notwithstanding the previous clause, the Government shall destine the
corresponding economic resources equivalent to 3% of the sale of ore minerals
exploited, to local sustainable projects of development, through
regional governments parochial boards and, if
that is the case, to the offices of the government of indigenous communities, in
accordance to the respective regulation.
  In general, the mining concession holder
has the same rights and duties established in the case of the contracts of mining
exploitation individualized in the following article.
  Art. 41.- Contract of
Mining Exploitation.-Within the term of six months from the resolution that declares the beginning of
the stage of exploitation, the mining concessionholder shall celebrate with the State,
through therelevantMinister a Contract of Mining
Exploitation, which shall contain the provisions, conditions and terms for the
stages of construction and installation, extraction, transport, and trade of the
minerals obtained within
the limits of the mining concession.
  The template of these contracts shall be
approved by the relevant Ministry by means of a Ministerial
Agreement.
  Similarly, the contracts have to contain
the obligations of the mining concession holder on subjects of environmental
management, presentation of guarantees, good relationship with the
communities, payment of royalties and activities of partial or total
closure of the mine including the payment for all environmental assets
corresponding to a period equivalent to the one of the concession.
  The Contract of Mining Exploitation
shall contain the Base Price for the application of the standards determined by
the Tax Law in force.
  The contract shall establish the right
of the concession holder to suspend the mining activities subject to
the payment of an economic compensation in favor of the State, in case thetechnicalconditions or of the market bar them to
comply with the terms of time established for each stage and the activities
previously setforth.
  A mining concession holder shall not be
authorized to perform works of exploitation without the celebration of the
respective contract. Notwithstanding the previous clause, the owner of a mining
concession may take possession of those minerals he may obtain as a result of exploration
works.
  During the development of activities of
the exploitation stage, the mining concession holder shall comply with the valid
environmental regulations and shall not perform these activities without the
correspondingEnvironmental
Permit. The resolution of differences and/or controversies subject matter of
these contracts shall only submit to the judges of the Judicial Department of
Ecuador or an authority of arbitration in Latin America.
   14
  Art. 42. -Half yearly
reports
of production.
-At the start of the
exploitation stage of the deposit, title holders of mining concessions have to
present at the relevant Ministry, on a half yearly basis, audited reports
regarding their production in the previous calendar semester, according to technical guidelines prepared
by the Agency of Mining Regulation and Control, on January 15 and July
15of each year. These reports shall be
subscribed by the mining concession holders or their legal representative and
their technical consultantwho shall accredit his professional capacity in the fields of Geology and/or
Mining.
  Audits and technical verifications of
said reports shall be performed by Universities or Polytechnic Schools with
Departments or Schools majoring in Geology, Mines, Science of Earth and /or the Environment with
a sufficient technical capacity to prepare such report, evaluation or trial; or
professionals and/or firms certified by the Agency of Mining Regulation and
Control.
  The costs that demand the intervention
of the entities that
practice said evaluations shall be exclusively for account of the
concessionaire.
  Art. 43.- Mining or
metallurgical residues .-It is understood as those residues and tailings, discarded ore or rock, rubble,
debris, washings, sweepings, scoria, slag, and waste resulting from mining or
metallurgical activities.
  Mining or metallurgical tailings or
residues become an accessory part of the concession, processing plant, or
smelter to which they belong even though they may be located out of their
boundaries. The concession
holder can make free use of them.
  Art. 44.- Concession
of abandoned residues.-The
right to process ore mineral, smelt, refine or trade abandoned mining or
metallurgical residues is granted along with the rights delivered to the
mining concession title
holder over any other mineral substances that may be found in them within the
limits of the concession solicited according to the prescriptions of this
Law.
  The mineral-metallurgic residues are
considered to be abandoned:
  a)
              When they come from a terminated mining
      title;
  b)
              They belong to a plant of
      processing or smelter whose permit is expired or it has not been in
      operation for a term of 2 years, except in cases of a force majeure or
      accident duly justified in the available time period;
  and,
  c)
              When it is not possible to
      determine their ownership
status.
  Previous to the issuance of a requested
mining concession, the Agency of Mining Regulation and Control shall certify the
existence of any of the previously referred cases.
  Chapter IV
  PROCESSING PLANTS, SMELTERS AND
REFINERIES
  Art.
45.-  Authorization for the installation and operation of plants.-The relevant Ministry is
empowered to authorize the installation and operation of plants of processing,
smelting and refining mineral ore toany natural person or legal entity,
local or foreign, public, of mixed economy or private, communitarian and of self
management who requests it under this Law and its General Regulation. To be a
mining concession title holder is not a requirement to filesaid petition.
  For small scale mining, the State shall
authorize the operation of processing plants of ore minerals, constituted
exclusively by crushing and milling, with an installed capacity of 10 tons a day
and processing plants; that include crushing,milling, flotation and/or cyanidation
with a minimum capacity of 50 tons a day.
   15
  Natural or juridical persons who request
the permit of installation and operation of processing plants, smelter or
refining, need to obtain the respective Environmental Permit, even if they are concession
holders.
  In order to obtain the permit, according
to the environmental legislation in force and the General Regulation to this Law
the following requisites are established.
  Art. 46.- Rightsof mining
concessionaire for the installation of plants.
-Title holders of mining
concessions are authorized to install and operate plants of processing, smelting
and refining, under the agreement of their concessions, without the necessity to
request the permit set forth in the previousclause, as long as said plants be
destined to process their own ore minerals. Processing of mineral ores not
extracted in their concession shall require the respective
authorization.
  Art. 47.- Half-yearly reports.
-Title holders
of plants of processing,
smelting and refining shall submit to the relevant Regional Technical Agency of
Mining Regulation and Control half-yearly reports about works done, jointly with
a summary of investments and works done, the production obtained and the
technological results of the operation.
  Art. 48.- Rightsand Obligations.
-The title
holders of ore reduction plants, smelters and refineries enjoy the rights
referred to in Title III, Chapters I & II, and are subject to compliance
with the obligations referred to in Title IV of this Law in the extent
considered applicable.
  Chapter V
  TRADE OF MINERAL
SUBSTANCES
  Art. 49.- Rightof Free trade. -Mining concession holders
may freely commercialize their production either locally or
abroad.
  Art. 50. -Licenseof
trade.-Natural persons or legal bodies who are not
title holders of mining concession and trade or export metallic minerals or
export non-metallic minerals should obtain the corresponding permit at the
relevant Ministry according to the Regulation under this Law. Anyconcessionaire who trades in metallic
minerals or exports non-metallic minerals, originated from another concession
must also obtain said license or permit.
  This permit is not necessary for those
natural persons or legal bodies trading in non-metallic mineral substances within the country, as
well as jewelry artisans.
  Art. 51.- Termof validity of the
permit and renewal. -Trading permits given to natural persons
or legal entities engaged in the activities mentioned in the preceding Article
will be valid for a period
of three years. These permits are non-transferable and can be renewed for
similar periods in accordance with the Regulation under this
Law.
  Art. 52.-
Registerof Traders. -The Agency of
Mining Regulation and Control shall keep a register of all those involved in the trade of
metallic minerals and of those involved in the export of metallic and
non-metallic minerals with the purpose to keep statistical data of local trade
as well as the export of these mineral substances and also as a measureto ensure the compliance of the
obligations established in this Law.
  Art. 53.- Dutiesof
traders.
-Those legally
authorized to trade in mineral substances must:
  a)
              Become withholding agents
      according to the tax code in
force;
  b)
              File detailed
      declaration forms
      indicating all withholdings and deductions made;
    and,
  c)
              Send half-yearly reports to the
      Relevant Ministry in regards to the origin, volume and value of their
      purchase; destination, volume and value of sales; any taxes withheld of
      any other statistical
      information required by said authority. These reports shall be
      filed in simplified forms issued for this purpose by the Agency of Mining
      Regulation and
Control.
   16
   Art. 54. -Revocation of
License.
-Failure to
comply with of any of the obligations mentioned in the previous Article shall
result in the cancellation of the trading permit without prejudice to the
corresponding liabilities.
  Art. 55. -
Illegaltrade of ore minerals. -The following is considered illegal
trade of mineral substances:
  a)
              Mining concession holders that trade
      domestically in metallic minerals or export metallic or non-metallic
      minerals all originated from other concessions, without the license
      required in Art. 50; and;
  b)
              Miners who sell metallic minerals
      to people or entitiesnot authorized to trade in
      them.
  Art. 56. -Illegal Exploitation
of Mineral Substances.–-Those activities of people who exploit
illegally mineral substances operate, work and perform mining activities in any
phase without a mining concession title, including artisan miners who do not have the
legal corresponding permit are defined as illegal
exploitation.
  Art.
57.-  Legal Penalties.-Illegal exploitation or
trade of mineral substances shall be punished by the administrative authority
through the confiscation of
the machinery, equipment and mineral substances involved in the act, and a fine
equivalent to the total cost of the minerals extracted illegally, without
prejudice to legal actions derived from these violations. These penalties are to
be applied toany mining subject. A due process is
guaranteed.
  Damage to the environment and the
ecosystem and biodiversity produced as a consequence of illegal exploitation or
invasions, they shall be considered an aggravation at the moment of the
dictation of the resolutions in connection with the
administrative assistance process.
  TITLE III
  RIGHTS OF TITLE HOLDERS OF MINING
CONCESSIONS
  Chapter I
  RIGHTS IN GENERAL
  Art. 58. -
Continuityof Work. -Mining activities can be
suspended in the case of land invasion, or whenthe security of the health and life of
mining workers demand it, or of those communities located near the perimeter of
the area where mining activity is being performed, according to the General
Regulation under this Law, or in the event the Civil Defensedemands it, or when noncompliance of
Environmental Permit be verified by the relevant environmental authority. In any
case, the provision of suspension of mining activities shall be issued,
exclusively, by the relevantMinister, by means of a motivated resolution.
  The mining concessionaire obstructed to
normally carry out his mining works because of duly proved Force Majeure or Act
of God shall request to the relevantMinistry, the suspension of the concession term
during the period of said impediment. Forthis purpose, the relevant Ministry,
through a motivated resolution shall admit or deny that
request.
  Art. 59. -
Constructionand Complementary
Installations. -The title
holders of mining concessions may build and install within their concessions:
plants of processing,
smelting and refining, tailings ponds, buildings, camps, storage areas,
pipelines, pumping stations, conveyors, maintenance shops, electric lines,
reservoirs, communication systems, roads, railroads, and any other local
transportation systems or installations, ditches, piers,
and other shippingsystems,
aswell as to perform
necessary activities for the development of their operations and other
installations, subject to the provisions under this Law, the valid environmental
regulations andother
relevant legal provisions, after a mutual agreement with the owner of the
surface estate or, after having been granted the necessary easements, according
to the Constitution, this Law and its General Regulation.
   17
  Art. 60. -Water management and
incorporation of
easements. -The granting of mining
concessions in general and the authorization to install treatment plants,
smelters, and refineries require the authorization of the National
Secretary ́s Office of Water
and it has the implicit right to the use of water and the right to benefit
from any easements that are necessary, in accordance with the proceedings
established in the Law.
  Art. 61. -Permit for the use
of waters. -Mining
concessionaires who obtain the authorization of the relevant authorityof Water shall submit
before therelevant
Ministrythe technical
study that justifies the feasibility of the works to be done approved by the
relevant authority of Water.
  The water fountains used during mining
works can be used by the mining concessionaire, with the authorization of the
Authority of Water, with the obligation to remove them, observing the
requisites, permissible limits and technical parameters established in the
applicable environmental legislation.
  Chapter II
  ILLEGAL INTRUSION,
ADMINISTRATIVE PROTECTION,
INVASION OF MINING AREASAND OPPOSITIONS
  Art. 62. - ClaimofIntrusion.
-The holders of mining
concessions or artisan mining permits are forbidden to intrude with their works
into another concession without permission of their owner. Theclaim of intrusion into mining works
should be submitted to the relevant Ministry, accompanied by the concession
title as well as the updated certification of payment of patent fees. The
General Regulation under this Law shall determine the proceeding tofollow.
  Art. 63. -
AdministrativeAssistance. -The title holder or legal
owner of a mining right may request through the Public Ministry the restraint of
illegal mining activities, whether in process or imminent, according to the
rights of assistance granted under this
Chapter.
  The State, by means of the Agency of
Mining Regulation and Control, shall give assistance to mining title holders
under the law for reasons of intrusion, illegal occupancy, dispossession, or any
other act that may impede the free exercise of their mining
activities.
  Art. 64. -Eviction
warrant.-The Agency of Mining Regulation and
Control, on fair grounding of the petition filed by the complainant shall issue
an warrant of eviction to the illegal occupant of the mining area which
isthe object of the case .
The illegal occupant has 3 days to comply voluntarily, at which point removal by
force is authorized.
  If in spite of the previous warning, the
illegal occupant does not leave the area, The Agency of Mining Regulation and
Control,at request of the
complainant, shall order eviction by force. This dislodgement will be the
responsibility of the relevant Police authority in the
province.
  Art. 65.- Legal
penalties to invaders of mining areas.-Those persons with the intention of
obtaining benefit for
themselves or for third parties, individually or collectively, by illegally
occupying mining concessions, or by violating the rights of the State or of the
holders of mining titles, shall bepenalized witha fine of two hundred unified
basic salaries, the
confiscation of tools, equipment and production obtained, without prejudice to
the request of administrative protection and penal sanctions required by the
case.
  Art. 66. -Formulation
of oppositions.-Title
holders of mining concessionsmay oppose the granting of concessions
when the requests for said concessions are allegedly superimposed on their own
existing concessions.
   18
  Title IV
  OBLIGATIONS OF MINING TITLE
HOLDERS
  Chapter I
  OBLIGATIONS IN
GENERAL
  Art. 67. -Labor
obligations.-Labor force obligations contracted by the
title holders of mining rights with their workers shall be of their exclusive
responsibility and under no circumstance they shall become responsibility of the
State.
  On the other hand, in case of those
workers involved in mining
activities, they shall receive only 3 per cent of the shares as established in
this Law. The amount left shall be paid to the State, to be destined, only and
exclusively, on projects of social investment of health, education and housing,
through their regional departments in the area
of the mining project. Said projects have to be harmonized with the National
Plan of Development.
  In the
case of small scale mining workers, they shall receive 10% of the profits, and
5% left shall be destined for the State.
  Any form
of illegal practice related to workers of mining activity is prohibited.
  Art.
68.-  Industrial-mining security and hygiene.-Mining rights title holders have the
obligation to preserve the physical and mental health and the life of
their technical personnel
and their workers by applying industrial and mining security and hygiene
regulations set forth in the legal provisions and regulations, providing, in
addition, hygienic and comfortable conditions of lodging, at the work camps,
according to the plans and specifications
approved by the Agency of Mining Regulation and Control and the Ministry of
Labor.
  Mining concessionaires must have a validand approvedBylaw of MiningSecurityand Health, according to the regulation
that in this purpose shall
be issued by the relevant Ministry and the Ministry of Labor and other pertinent
Regulationsdictatedfor this purpose by the corresponding
institutions.
  Art. 69. -Prohibition of child
labor.-Labor of children
or adolescents in any position, inany mining activity is banned, pursuant
to item 2 of Art. 46 of the Constitution of the Republic. Noncompliance of this
disposition shall be considered an aggravated infraction and it shall be
penalized with a fine set forth in the General Regulation under this Law; and, in case ofrecurrence, the relevant Ministry shall declare
the lapsing of the concession, the termination of the contract or artisan
permits. In case of women labor, they shall receive a special treatment in
accordance to the Regulation under this Law.
  Art. 70. -Compensations.-The holders of mining
concessions  are obliged to perform their work by means of methods and
techniques that minimize damage to the soil, the environment, natural or
cultural heritage and adjacent concessions and,in any case, compensate any damage or
harm they may be caused in the course of their work.
  Noncompliance of the methods and
techniques referred to in the previous item shall be considered as a cause of
suspension of mining activities; in addition to thecorresponding
penalties.
  Art. 71. -
Conservationof benchmarks.
-The holders of mining
concessions are under the obligation to preserve the benchmarks; failure to
comply shall result in a fine to be established by the relevant Ministry in
accordance with provisions
set forth in the General Regulation under this Law.
  Art. 72. - -Alteration of
benchmarks. -The holders
of mining concessions may not alter or move the benchmarks denoting the limits
of their concessions; failure to comply shall result in a fineto be established by the relevant
Ministry without prejudice to the penal liability arising in the eventthey have acted maliciously, according
to the dispositions of Article 580 of Penal Code, any person who tear down,
alter or move benchmarks ofminingconcessions shall also be punished by
law.
   19
  Art. 73.-
Maintenanceof and access to
registrar`s offices.-The holders of mining
rights must:
  a)
              Keep accounting records, financial
      records, technical registers, employment registers, production statistics,
      records of materials
      consumed and energy used and others which adequately reflect the progress
      of their operations; and,
  b)
              Facilitate the access of
      functionaries duly authorized by the Relevant Ministry to the records and
      registers referred to above, so asto evaluate the mining activity
      performed.
  After this information is submitted to
the relevant Ministry it shall be declared public, within the legal framework
established by the Law in force.
  Art. 74. -Inspection
of Installations -The holders of
mining rights are obliged
to permit the inspection of their installations and operations by officials duly
authorized by the relevant Ministry, the Ministry of Environment and its
agencies. Said inspections shall not interfere in any circumstance the normal
performance of the mining
works.  In the event of refusal or obstruction to the inspection, the
official in charge shall inform to the relevant Ministry`s local agency, which
is able to suspend the mining activities.
  Art.
75.-  Employment of local personnelThe holders of mining rights are
obliged to use Ecuadorian personnel in a proportion of not less than 80% for the
development of their mining works. In the percentage left thespecializedEcuadorian technical staff shall be
preferred, if there are no local professionals who meet this
requirement, foreign personnel shall be hired, and they have to comply with the
Ecuadorian legislation in force.
  Art. 76. -Training
of Personnel.-The holders of mining rights
are obliged to have training and permanent preparation programs for their personnel at
all levels. Said programs have to be periodically reported to the relevant
Ministry.
  Art. 77. -Support
to local employment and training of technicians and professionals.-Mining concession holders
shallpreferentiallyhire those workers who live in the
surrounding localities and zones of the mining projects and they shall maintain
a policy of human resources and social well-being to integrate the families of
the workers.
  Likewise, in their operation plans and
in coordination with the
Agency of Mining Regulation and Control they should also admit into their mining
operations students of secondary schools and colleges in order to do practical
work in the field of mining and related disciplines, providing them with
thenecessary
facilities.
  Chapter II
  PRESERVATION OF THE
ENVIRONMENT
  Art.
78.-  Environmental Impact Studies and audits.-The holders of mining concessions and
plants for processing, smelting and refining before the start of mining
activities in the different
stages must prepare and submit environmental impact studies and environmental
management plans to prevent, mitigate, control, rehabilitate and compensate
environmental and social impacts derived from their activities; such studies
should be approved bythe Ministry of Environment, in order to
be receive the respective Environmental Permit.
  No mining activities of advanced
exploration, exploitation, ore reduction, smelting, refining and mine closure
shall be authorized unless they have the respective Environmental Permit issued by the Ministry
of Environment.
  In order to process the presentation and
qualification of the studies of environmental impact and the plans of
environmental management and the granting of environmental permits, and any
other administrative
aspects, permissible limits and demandable technical parameters shall be those
established in the environmental regulation in force.
  All of the stages of mining activity and
their reports demand the submittal of economic guarantees as set forth
inthe environmental
legislation in force.
   20
  The terms of reference and the contests
for the elaboration of studies of environmental impact, plans of environmental
management and environmental audits shall be prepared, mandatorily by the
Ministry of Environment and
other relevant public institutions, these attributions shall not be delegated to
private institutions.
  Expenses incurred by the Ministry of the
Environment under these terms of reference and contests shall be afforded by the
concessionaire.
  The holders of mining rights are obliged to
submit an annual environmental audit that allows the controlling entity the
monitoring, surveillance and verification of the accomplishment of environmental
management plans.
  Art. 79. -
Treatmentof Water.
-After havingobtained the authorization from the
National Secretary ́s Office
of Water the holders of mining rights can use water in their work and
processing, and they have to return it to its originalcourse,lake or pond from which it was taken,
free from contamination or
complying with the environmental and Water ́s regulations in force, so as not to
affect the constitutionally recognized rights of the people and those of the
nature.
  The water treatment to be applied must
guarantee its quality and the compliance of the parameters of environmentalquality;it must be set forth in the respective
environmental impact study in accordance to the relevant Laws and their
regulations.
  Reutilization of water, through systems
of recirculation is a permanent obligation of the concession holders.
  Failure to comply this provision shall
result in penalties that may lead to the lapsing of the concession or revocation
of the permit.
  Art. 80. -Reforestation. -If the mining activity
requiresperformingworks that demand the clearingand lumbering of trees, the
holder of the mining right will be obliged to proceed to reforest with native
species the area according to the environmental regulation and the environmental
management plan.
  Art. 81.-
Accumulation of Residues and prohibitionof waste
dumping.-Title holders of
mining rights and artisan miners in order to accumulate mining-metallurgic
residues they have to adopt strict measures of caution that avoid the
contamination of the soil, water, air and/or biota of the  places
where they are deposited,
in all their stages including the stage of closure, building installations such
as waste dumps, waste fillings, tailings ponds or dams or other infrastructures
technically designed and build that guarantee a safe and  long term
management.
  Dumping of debris, tailings or any other
not treated waste, from any mining activity, on rivers, gulches, lagoons or
other places where risks of contamination are present is
prohibited.
  Failure to comply this provision shall
result in penalties that may lead to the lapsing of the concession or
revocation of the permit.
  Art. 82. -Preservation of
Flora and Fauna. -Environmental impact studies and the plans of environmental management shall
contain information about the species of flora or fauna existing inthe zone, as well as the respective
measures of impact mitigation.
  Art. 83. -Waste Management.
-The management
of waste, solid, liquid residue, and gaseous emissions produced by mining
activity within the national territory must comply with the Constitution and the environmental regulation
in force.
  Art. 84. -Protection of the
Ecosystem. -Mining
activities in all their stages have to contain environmental protective
measures, in compliance with the Political Constitution of the Republic of
Ecuadorand the
environmental regulation in force.
  Art. 85.-Closure of
mining operations-Titleholders of mining concessions should
include in their annual programs of activities with regard to the plan of
environmental management, information of investments and activities for the partial
or
   21
  total closure of operations and for the
rehabilitation of the area affected by mining activities of exploitation,
processing, refining or smelting.
  Likewise, in a term of not less than two
years after the total closure of operations for mining activities of
exploitation, processing, refining or smelting, the mining concession holder
must submit before the Ministry of the Environment, for its approval, a Plan of
Closure of Operations that includes the recovery of the area, aplan of verification of its
accomplishment, social impacts and the guarantees set forth in the environmental
regulation in force; as well as a plan ofincorporatingto new ways of economic
development.
  Art. 86. -Environmental
Damages. -For all those
legaleffects derived from
the application of dispositions of this article and especially those of the
valid environmental regulation the relevant environmental authority is the
Ministry of Environment.
  Environmental violations against the
cultural heritage anddamage to third parties shall be penalized
in accordance to the Political Constitution of Ecuador and the penal and civil
law in force.
  Failure to comply with any of the
obligations mentioned in this Chapter shall result in administrative sanctions
to mining concession
holders and bearers of the respective permits by the relevant Ministry, without prejudice
to civil and penal actions brought. These administrative sanctions may
include the suspension of mining activities of said operation or their lapsing.
  The proceeding and requisites for the
application of said penalties is set forth in the General Regulation under this
Law.
  Chapter III
  SOCIAL MANAGEMENT AND PARTICIPATION OF
THE COMMUNITY
  Art. 87. -Right to
information, participation and consultation.-The State is the authority in charge of
the execution of the processes of participation and social consultation through
the corresponding public institutions and the regulation in force. Said
competence is not transferable to any other private
authority.
  These processes aim to promote the
sustainable development of mining activity, respectfor the environment, the social
participation in environmental affairs and the development of communities
located in the surrounding areas of influence of a mining project.
  In case a process of consultation
results in a majoritarian opposition from the respective community, thedecisionto develop the project shall be adopted
by a resolution motivated by the relevant Ministry.
  Any mining concession holder must
respect theright of people
to the access to information processes, participation and consultation in
environmental management of mining activities.
  For any process of consultation, the
Ministry of Finance shall provide the respective budget through the relevant
Ministry.
  Art. 88. -Process of
Information. -From the
moment a mining concession is issued and during all of its stages, the
concession holder, through the State, shall inform with accuracy to the relevant
authorities, local governments,communitiesand entities that represent social or labor
interests, regarding the possible impacts, not only positive but also negative,
of mining activity.
  The environmental authority shall give
free access to environmental and social studies, formally filed, as well as the
reports and technical
resolutions issued by the relevant authority, as determined by the
Law.
  Art. 89. -Process of
Participation and Consultation.-Citizen participation is a process
whose final purpose is to consider and incorporate thecriterionof the community to social and environmental
management of a mining project, said
   22
  process shall be performed in all the
stages of mining activity,within theframework of proceedings and mechanisms
set forth in the Constitution and the Law.
  Art. 90. -Special
Procedure of
Consultation to the Peoples. -The processes of citizen participation
or consultation have toconsidera special procedure of consultation to
indigenous communities, people and their nationalities, beginning with the
principle of legitimacy and representation through their
institutions, for those cases in which mining exploration or exploitation be
performed in their own land andancestors` territoriesand when said labors may affect their
interests. In compliance with Art. 398 of the Constitutionof the Republic.
  Art.
91.
-Claims
of Environmental and Social Damage and Threats. -Any mining activities that generate
socialor
environmentalimpacts shall
be subject of legal proceeding by means of any natural person or legal body
before the Ministry of
Environment, after the accomplishment of the formalities of a claim, such as
signature and rubrics recognition.
  The Ministry of Environment shall adopt
timely measures that avoid environmental damages when there is a scientific
certainty that they arearesult ofmining activities.
  In case ofdoubt aboutthe environmental damage as a result of
any action oromission, the Ministry of Environment in
coordination with the Agency of Regulation and Control shall adopt protective,
efficient and timelymeasures thatshall simultaneously and in the same
providence order the practice of actions inorderto provethe damage.
  Chapter IV
  PAYMENT OF ROYALTIES
  Art. 92. -Royalties of Mining
Activity.-The State, is
the owner of non-renewable natural resources, and it has the right to receive the payment
of royalties from the mining concession holders who perform labors of
exploitation, in accordance to this Chapter.
  Royalties paid by mining concessionaires
shall be established based on a percentage of the productionand shall be paid half-yearly in the
months of March and September of each year. The amounts from royalties have to
be duly reflected in the half-yearly reports of production and the general
balance submitted to (Servicio de Rentas Internas) Internal Revenue Service.
  Art. 93. - Royalties on exploitation of
minerals. - The mining concessionaire has to pay a royalty to the State,
which shall participate in an amount not smaller than the concessionaire who
exploits it, the amount of royalties cannot be less than 5% of the total value
of the sales, in addition, they shall contribute with 12% of the profits of the
workers, 25% of income tax, 12% of the tax to added value and 70% of windfall
gains.  In the Contract of Mining Exploitation, the Concession Holder
and the State shall agree the percentage of royalties takinginto account the technical and economic
background of the project, and the standard references of the international
market.
  60% of these royalties shall be destined
for productive projects and of local sustainable development through
municipal government offices and parochial boards and, if required, to
authorities of the Government of indigenous communities and /or local
surrounding territories.These resources shall be allocated
prioritizing theneeds of the communities located in areas
ofinfluence
affecteddirectly by the
mining activity.
  Holders of small scale miningrightsshall pay for royalties 3% of the sales
of the main and secondary minerals, taking into account standard references of
theinternational
market.
  The amounts of royalties, plus legal
benefits such as income tax, value added tax, patents and other taxes, shall
justify the implementation of Art. 408 of the Constitution of the Republic.
Evasion of the payment of royalties shall constitute a cause of lapsing, without
prejudice to civil and penal effects stemmed.
   23
  The percentage of royalties for the
exploitation of non metallic minerals shall be estimated based on the costs of
production.
  The regulation under this Law and the
contract of Mining
Exploitation shall establish the parameter for the payment of royalties, as well
as the requisites for its distribution.
  Title V
  RELATIONS OF THE HOLDERS OF MINING
RIGHTS AMONG THEMSELVES AND THE OWNERS OF THE LAND
  Chapter I
  PERMITS AND EMERGENCY OPERATIONS
  Art. 94. -Permission
to Neighbors.-The holders
of mining concessions and processing, smelting and refining plants shall permit
neighboring holders access to their adjoining parcels installations, galleries
or pits in the following circumstances:
  a)
              When there is a well-founded
      danger that the work being performed could give rise to any damage to the
      adjacent mine;
  b)
              When cave-ins or weakening in thegalleries,pits and otherinstallationscan be repaired more easily and
      quickly from theneighboring galleries, pits, or
      installations, even if it is necessary to open temporary means of access.
      In every case the costs shall be for the exclusive account of the
      beneficiary; and
  c)
              When there is a suspicion of
      intrusion.
  If this permission is denied, the interested party can have
recourse to the relevant Ministry to obtain it.
  Art. 95. -Damage Due to
Accumulation of Water. -When damage or harm is being done by the
accumulation of water on a nearby or adjacent concession, the injured party
should require in writing
that the onethatis causing the damage drain this
accumulation out fully within 48 hours, without prejudice to any indemnity for
damages.
  The cost of draining out this
accumulation shall be for the exclusive account of the one causing damage but the injured party may cover
the cost, with right to reimbursement.
  The injured party may have recourse to
the relevant Ministry to have this item be applied, as well as to inform about
it to the National Secretary ́s Office of Water.
  Art. 96.-Use of Underground
Water in adjacent mining concessions.-The holders of mining rights may use
underground water discovered in an adjacent mining concession if the discoverer
is not making use of it, in compliance with the Law of Water which regulates
hydric resources and
environmental control guidelines.
  Chapter II
  INTRUSION
  Art. 97. -
ProhibitionofIntrusion.
-The holders of mining
concessions are forbidden to intrude with their works into or onto another
concession without permission of theirneighbor. Any unauthorized intrusion obliges the
party doing it to stop work and pay the value of the minerals he has extracted,
deducting the cost of their extraction and pay an indemnity for any harm
caused.
   24
  Art. 98. -
Suspensionof Work.
-In the event
of a report of intrusion,
the relevant authority, and the Agency of Mining Regulation and Control shall
order the suspension of labors in the zone de litigation and dictate the
corresponding resolution for said controversy.
  Art. 99. -Criminal intrusion.
-Intrusion which exceeds 20 meters, measured
from the boundary of the concession, shall be presumed criminal. Similarly, the
intrusion shall be considered criminal in case those works suspended arerestarted afterthe suspension warrant issued by the
Agency ofminingRegulation and Control In these cases,
the amount to be paid for the minerals extracted or their return shall be done
with no deduction and without prejudice to the penal responsibility of those who
intrude.
  Chapter III
  EASEMENTS
  Art. 100. -Classesof
easements.-From
the moment a mining concession is incorporated or a plant for processing,
smelting and refining is authorized, the surface lands are subject to the
following easements:
  a)
              To be occupied to the full extent
      required by the installations and construction belonging to
      the mining activity.  The mining concession holder shall
      mandatorily pay to the owner of the land an amount for the use of
      easements, as well as the corresponding payment for the damages and
      prejudice they cause. In case theparties do not agree, the Agency
      of Mining Regulation and Control shall determine the
      amount;
  b)
              Transit, water conduit, rail
      lines, landing strips, ferries, ramps, conveyor belts and all other
      systems of transport and
communication;
  c)
              Those establishedin the Electric Regime Law for the
      case of installations of electrical service;
  and,
  d)
              Others necessary for the carrying
      out of mining activities.
  Art. 101. -Voluntary Easements
and Agreements. -The
holders of mining rights may agree with the owners ofthe land on the extent of terrain they
need for their constructions and installations for the adequate exercise of
their mining rights, either in the stages of exploration or exploitation, as
well as for their installations and buildings, exclusively destined to mining
activities.
  In case of zones belonging to Cultural
Heritage, for the granting of easements theyneedto have the authorization of the
National Institute of Cultural Heritage in accordance to the conditions
established in the administrative act issued by said
Institute.
  Art. 102. -Easements of
Neighboring Concessions. -To give or provide ventilation, drainage
or access to other mining concessions or to processing plants, smelters or
refineries, easements may be constituted on adjacent concessions or on free
areas.
  Art.
103.-Constitution and Extinction of Easements. -The incorporation of an
easement on lands, free areas or concessions is essentially transitory; its
exercise and the indemnities to which it gives rise shall be established bymutual agreement between
the parties, celebrated in a Public Deed and recorded in the Mining Register
kept by resolution of the Agency of Mining Regulation and Control. These
attributions are set out Mining Register.
  These easements expire with the miningrights and cannot be
utilized for purposes different from those belonging to the respective
concession or plant; they may be extended or reduced according to the activities
or requirements of the concession or the plant.
   25
  Art. 104. -Indemnity for
Damage.-Easements are constituted
after determination of the amount of indemnity for any harm they cause to the
owner of the land, building or concession on which they are set and may not be
exercised until the value thereof is agreed.
  Art. 105. -Expenses of
incorporation of
easements. -The costs
involved in the incorporation of these easements shall be of the exclusive
account of the concessionaire benefited or the owner of the
plant.
  Title VI
  EXTINCTION OF MINING
RIGHTS
  Chapter I
  EXPIRATION OF THE TERM OF THE CONCESSION
  Art. 106. -Expiration of the
term-Themining concession and the permits shall
be considered terminated for the expiration of the term established or its
deferral.
  The Agency of Mining Regulation and
Control shall order the annulment of therespective registers once the term of
valid life of a mining concession expires, if the mining concessionaire has not
requested to begin the stage of exploitation or the renewal of the term of
concession in the framework of an Agreement of Mining Exploitation, in the terms provided in the terms
of this Law.
  Chapter II
  REDUCTION AND RELINQUISHMENT OF THE
CONCESSION Art.
  Art. 107. -Faculty of
Concessionaires. -At any
time during the valid life of a mining concession, its title holders may reduce
or relinquish them totally
according to the established proceeding of this Law AND ITS GENERAL
REGULATION,, provided such relinquishments or
reductions do not affect the rights of third parties.
  The relinquishment shall result in the
cancellation of the respectiveregisters, leaving the mining area of
said concession free. In case of a reduction, the registry of the area which
remains inpossessionof the mining concessionaire shall be
recorded.
  Chapter III
  EXPIRATION OF CONCESSIONS AND
PERMITS
  Art. 108. -
Lapsingof Concessions. -The relevant Ministry is
authorized to declare the lapsing of mining concessions and permits in case
their title holders have not complied with the duties set forth expressly in
this Chapter.
  The process of lapsing might be legally
initiated by the relevant
Ministry through the request of the Ministries related to mining activity, and
it shall be subject to the provisions, requisites and proceedings determined for
this purpose by the General Regulation under this Law.
  The technical and legal decision shall be considered the
base for the declaration of lapsing by the Agency of Mining Regulation and
Control.
  Once the mining concessionaire is
notified, the mining concessionaire shall be given, for only one time, a term of
30 days to dischargethe
cause of lapsing or to accomplish with the pending obligation, with the payment
of a fine equivalent to twenty five unified basic wages.This right to resolve the noncompliance
that constitutes a cause of lapsing shall not be applied in the cases setforth in articles110, 115,
116 and 117.
   26
  Art. 109. -Effects of lapsing -Lapsing terminates the
mining rights. With exception of the cause established in article 117, it is not
necessary to have a previous legal sentence for the declaration of lapsing,
and it shall produce its
effects on the effective date of its notice.
  Art. 110.-Lapsing for
debt service defaultMining
concessions lapse when their owners have ceased to pay the patent fees,
royalties and other rights or taxes established in this Law.
  Art. 111. -Lapsing for failure
to present exploration reports or failure to comply with the minimum investment
requisite.- It is a cause
of lapsing the failure to submit exploration reports to the relevant Ministry of
the annual report of the activities andinvestments on exploration performed in
the area of the mining concession.
  Art. 112. -Lapsing for failure
of presentation of production reports.-The mining concession shall lapse in
the event their title holders fail to present within the term set forthin Art. 42, the audited
reports on their production.
  Art. 113. -Lapsing for
exploitation without title and for presentation of false
information.-A mining
concession shall lapse in case their title holder performs labors of
exploitation, directly or indirectly, before the celebration of the
respective Contract of Mining Exploitation.
  Likewise, a mining concession shall
lapse in case their reports under this Law contain forged information or if they
intentionally alter their technical and economic conclusions.
  The technical and legal decision shall
be considered the base for the declaration of lapsing by the Agency of Mining
Regulation and Control.
  Art.  114. -
Intentional alteration of benchmarks.-Malicious alteration of benchmarks duly
proved, shall constitute a
reason of lapsing of the mining concession.
  Art. 115. -Lapsing for
Declaration of Environmental Damage. -The relevant Ministry is duly authorized
to declare the lapsing of mining concessions in case their activities produce a
serious and permanent
environmental damage, without prejudice to the liability of the concession
holder to repair the environmental damage caused.
  The declaration of environmental damage
in thetechnicaland legal aspects, shall be given by
means of a resolution issued by theMinistryof Environment, in accordance with Art.
78 of this Law. In the event of damage tohydricresources because of mining
activities, the declaration
of environmental damage shall be the attribution of the National
Water ́s
Office.
  The proceeding andrequisites for the declaration of
environmental damage shall be set out in theGeneral Regulationunder this Law.
  Art. 116. -Lapsing for Damage of
Cultural Heritage of the State. -The relevant Ministry, after
a favorable technical report from the National Institute of Cultural and Natural
Heritage, is authorized to declare the lapsing of mining concessions in case
their activities produced a serious and permanent damage to the cultural
heritage of the State, in accordance with the Constitution of the Republic and the Law of Cultural
Heritage.
  The proceeding and requisites for the
declaration of cultural heritage damage shall be set forth in the General
Regulation under this Law.
  Art. 117. -Lapsing for Human
Rights Violations. -The relevant Ministry,
after a sentence or
resolution issued by a relevant judge who determines human rights violations,
either by the concession holder or his representative, as well as his
subcontractors and specially the security guard companies who act on behalf of
the concession holder or his representative, and it
is needed a sentence dictated by a competent judge who determines violation of
human rights.
   27
  Art. 118. -Ineligibility to
request mining concessions. -Any natural person or legal body who
had loses their status ofmining concessionaires due to failure in the accomplishment of one or more legal
or contracting duties derived from the mining concession, shall not be able to
obtain a concession in those areas covered, totally or partially, for the
original concession,for a term of three years starting on
the issue of the corresponding administrative act of lapsing ofsaid concession.
  Art. 119. -Responsibilities and
Penalties. -Public workers
who fail to comply with one or more of the legal duties established in
thisLaw, shall respond
administratively, civilly andcriminallyof said
noncompliance.
  Likewise, those professionals in charge
of providing legal, technical, economic or environmental information to relevant
authorities shall be civilly and criminally responsible for the presentation of forged or
malicious information.
  Chapter IV
  NULLITY OF MINING
RIGHTS
  Art. 120. -Revocation
of mining concessions.-Those mining titles of
concessions assigned under violation of the terms set forth in this Law shall be
revoked. In addition those
concessions assigned superimposed on another that is legally valid and
registered, shall be null in the extent of the superimposed section, providing
that the effects of lapsing are not produced.
  Art. 121. -Declaration
of nullity.-The relevant
Ministryshall
beinformed of and resolve
the nullity of a mining concession for a complaint of affected holders of mining
rights or third parties. The nullity produces the return of the mining to the
mining concessionaire who has a preferential right, or as the case may be to
the State, leaving it free.
  Art.
122.-  Right of property on mining goods.-In the event of termination
of mining rights, the former title holder shall not lose his right on buildings,
machinery, installations and other elements of work, which can be
withdrawn at his own expense.
  Title VII
  MINING CONTRACTS
  Chapter I
  APPLICABLE STANDARDS AND REQUISITES OF
CONTRACTS
  Art. 123.- Applicable
regulations.-Contracts entered between
concession holders, or by and between themwith third parties, related to mining
rights and activities, are ruled by Art. 125 of this Law andalsoby regulations of private right, in the
extension they are not opposed to the Law.
  Art.
124.-Requisites.-Mining contracts, in order
to be considered valid,
must be executed by means of a public instrument and record it at the Mining
Register in charge of the Agency of Mining Regulation and Control and comply
with all the requisites set forth in this Law. All contracts have to be
published on the web page of the Mining
Register.
  Chapter II
  ASSIGNMENT, TRANSFER, AND IRREVOCABLE
PROMISE OF SALE
  Art. 125. -Nontransferablerights.-Mining rights, in general,
may be assigned or transmitted among living parties or by reason of death, in
the same way as realestate, with the authorization of the
Agency of Mining Regulation and Control. Said transfer is perfected by the
registration in the corresponding book of the Mining Registry governed by the
Agency of Mining Regulation and Control; the registration rightsshall be set forth in the General
Regulation of this Law.
   28
  The assignment and transfer of rights of
a miningconcessionshallbe declared void and it shall not have
any value if thereisno authorization from the Agency of
Mining Regulation and Control,without prejudice to the declaration of
lapsing in accordance with this Law.
  Art. 126.-Irrevocable
Promise. -It is permitted
to celebrate contracts of irrevocable promise of cession or transfer of rights
and shares in a mining concession or, in general, in relation to any other mining rights,
complying with the requisites and duties set forth in the previous
article.
  In this type of contract it is
facultative for the promising assignee to celebrate the definitive contract or
not, but is mandatory for the promisor to celebrate said definitive
contract.
  Art. 127. - Non-Rescindable
Contracts for gross loss. -Contracts of cession,
transfer or exchange of rights and shares on mining titles and other mining
rights cannot be rescinded on grounds of excessive injustice.
  Chapter III
  CESSION, TRANSFER, AND
PLEDGE
  Art.128.-Assignment in
Guaranty -.-The universally valid rights
which derive from mining concession and the plants for processing, smelting, and
refining may be mortgaged in the same manner as anyother real estate.
  Assignmentcontracts in guaranty over the above
mentioned buildings shall be recorded by means of a public instrument in the
Mining Registry in custody of the Agency of Mining Regulation and
Control.
  Art. 129. -The
Pledge.
-It is permissible to constitute liens on the
personal property destined for the operation of the concession and on the
mineral substances extracted from the deposit.
  Pledge Contracts have to be recorded
within the provisions of the registration of concessions in theMining Registry kept by the Agency of
Mining Regulation and Control.
  Art. 130. -Legal
actions.-The creditor may
take legal action that lead to the auction of the encumbered estate according to
articles 128 and 129.  Judicial authorities shall not be
empowered to interrupt
mining work.
  TITLE
VIII
  JOINT OWNERSHIP, MINING COOPERATIVES AND
ASSOCIATIONS DEDICATED TOMINING ACTIVITIES
  Chapter I
  JOINT OWNERSHIP, MINING COOPERATIVES AND
ASSOCIATIONS DEDICATED TO MINING ACTIVITIES
  Art.
131.-Incorporation of Jointownership on a mining
concession. -Presents itself when the
State grants a mining title to various natural persons who have requested it in
a single document, subject to the pertinent provisions of the Law
herein.
  Art. 132. -
Responsibilityof Joint
owners. -Joint ownership does not
imply the existence of a legally incorporated company.  Joint owners
are jointly liable for the obligations derived from their condition of mining
title holders.
  Joint owners shall appoint a common
solicitor by means of apublic instrument registered at the
Mining Registry.Should it
not be possible, the notice delivered to one of them shall take effect as legal
notice to each.
   29
  Art. 133. - Rights and duties of
cooperatives, micro companies and associations.
-  .-Cooperatives micro companies and associations dedicated to
performing mining activities enjoy the same rights and have the sameobligations as this Law establishes for
the holders of mining rights and may enter into association with, and celebrate
all types of mining
contracts with, natural persons or legal bodies, local or
foreign.
  Title IX
  SPECIAL REGIMES
  CHAPTER I
  ARTISAN AND SUSTAINABLE
MINING
  Art. 134.-Artisan
miningIt is the activity
considered the product of individual, familial or associative mining workas a sustaining activity
authorized by the State as it is set forth in the Law and its Regulation, it is
characterized by the use oftools, hand devices or portable machines
destined to the obtaining of minerals whose commercialization en general hardly
allows to afford the basic
needs of the person or family group that performs it, and when it has not
required an investment of over fifty basic unified wages.
  In the event of the association of three
or more artisan miners, theirinvestmentshall be of threehundredsunified basic wages with a previoustechnical, economic, social and environmental
report by the Agency of Mining Regulation and Control.
  The relevant Ministry shall issue
permits for a valid term of up to ten years in order to perform artisan
mining; to be renewed for a
similar term of time in the event of a petition in written by the concession
holder submitted to the relevant Ministry, before the date of expiration, and
after having obtained a favorable report from the Agency of Mining
Regulation and Control and the Ministry of
Environment. Artisan mining permitsshallnot affect the rights of a mining
concession holder with a valid title; notwithstanding the foregoing, mining
concession holders shall be able to authorize the performance of
artisan mining works within
the area of their concession by means of mining agreements that comply with the
environmental and mining regulations and in accordance to the special regulation
to be issued for this purpose.
  The Agency of Mining Regulation and
Control is empowered to
regulate the exploitation of minerals and applicable mining safety standards,
and it shall create a detailed register of the people who perform this
activity.  For the verification and compliance of environmental
protective regulation,the relevant environmental authority is
the Ministry of Environment.
  Artisan miners are exempted to pay
royalties.
  Failure tocomplywith this law and its Regulation shall
result in the revocation of the permits. The assignee shall operate the
negative administrative silence.
  Art. 135.Revocation of artisan
mining rights. -The
permits of artisan miners shall be revoked, in the form and conditions set forth
in title VI, chapters I and III of this Law.
  Art. 136.
-The relevant Ministry
shall promote special programs of technical assistance,
environmental management, mining security, training and professional training to
small scale mining, for this purpose they can count on the support of
Universities and Polytechnic Schools that have the corresponding
majorson those areas.
  Chapter II
  SMALL SCALE MINING
   30
  Art.- 137.- Incentive
to national mining production.-In order to foment employment, the
elimination of sub-employment and unemployment, and promote the productivity andcompetitiveness, the accumulation of scientific and technological knowledge,
the State through the delegation of private initiative, cooperatives and
associations of popular and joint economy, shall promote the development of
national mining under the special regime of small mining, guaranteeing the right to perform said activity
individually and collectively under principles of solidarity and socialresponsibility.
  Art. 138. -Small scale mining
..-Small scale mining
consists in the activity which in reason of the area of concessions,
volumeof processing and
production, amount of investments, capital and technological conditions, must
have:
  a)
              A capacity installed of
      exploitation and/or processing of up to 300 metric tons a
      day.
  b)
              A capacity installed of production
      of up to 800 cubic meters a day, with relation to mining
      of non metallic material or
quarry.
  Natural persons or legal bodies that
perform small scale mining works have to be tile holders of a mining concession
for small scale mining and they shall comply with the special
provisions of Chapter II.
In any extension not regulated by special rules, the general contents of this
Law and its General Regulations shall be applied.
  The relevant Ministry shall promote
special programs of technical assistance, environmental management,
miningsecurity, training
and professional training for small scale miners. The Ministry of Environment
shall promote special programs of environmental handling in small scale
mining.
  Art. 139.-Concessions
for Small Scale Mining -The
State shall issue small mining concessions in favor of natural
persons or legal entities according to the prescriptions of this Law and its
General Regulation, which shall establish a special regime for small scale
mining.
  Small scale mining concessions shall be
granted bytherelevant Ministry in accordance to the
established proceeding in the Regulation and confers to its holder the personal
and exclusive right to prospect, explore, exploit, benefit, smelt, refine and
trade all the mineral substances which exist and can be obtainedwithin the area, with no more limits
than those stated in this Law.
  Art. 140.
-Register.-In order to have access to the rights
and benefits set forth in this chapter to mining title holders, they must
register their status of small scale miners, before the mining administrative authority of
the relevant Ministry.The proceeding and requisites shall be
set forth in the General Regulation under this Law.
  Art. 141. -Obligations. -Mining concessionaires that perform
small scale mining activities have to comply with the obligations of mining
concessionaires contained in the Title IV of this Law.
  Small scale mining title holders are
subject to the accomplishment of the environmental regulations in force and to
the approval of the training programs promoted by the National Institute of
Geological Research.
  Chapter III
  CONSTRUCTION
MATERIALS
  Art. 142. -
Constructionmaterial
concessions. -The State,
through the relevant Ministry, shall assign concessions for the exploitation of
surface clays, sands, rocks
and other materials of direct use in the construction industry,with the exception of river basins,
lagoons, sea beaches and quarries which shall be governed by the limitations set
forth intheGeneralRegulation of this Law, and it shall
also definewhat is understood as construction
materials and their amounts of exploitation.
   31
  According to Art. 264 of the
Constitution in force, each Municipal Government shall assume the jurisdiction
to regulate, authorize and control the exploitation of arid and
petrified materials, found
at the bottom of  rivers, lakes lagoons, sea beaches and quarries,which in accordance with the General
Regulation that shall establish the requisites, limits and proceedings for the
effect.The exercise of the
competence shall be done
according to the principles, rights and obligations set forth in Municipal
Ordinances issued in this regard. No conditions or obligations other than those
set forth under this Law shall be established.
  Art. 143. -Rights and
Obligations of the concessionaire of construction
materials. -The
concessionaire shall be authorized to explore said materials without the
celebration of a Mining Exploitation Contract; the exploration shall be done
after the celebration of said Contract and it shall include the easements required for a suitable exercise
of the rights of his concession.
  Notwithstanding the previous clause, the
owner of the surface land shall have the first option to purchase the requested
concession that coincides with the area he owns. If the owner of the estate, as a free and voluntary
act, assigns the authorization for a concession on the land he owns, this
authorization implies the waiver to the first option to be assigned a concession
on said estate.
  On the other hand, the construction
material concessionaires
have to comply with the obligations derived from Articles 38, 41and 42 Chapter I of Title III and
Chapters I, II, III and Title IV of this Law. They also have to pay for the
royalties stipulated in this Law for small scale mining.
  Art. 144.-The free
exploitation of construction materials for publicworks. -The State in a direct way or through
its contractors can freely exploit the construction materials destined for
public works in non assigned or assigned areas.
  In consideration of thepublic and social benefit, these
exploitation works shall be authorized by the relevant Ministry. The valid term
for this exploitation shall be issued only and exclusively based on the
technical requirements of production and in the term that these
publicworks take.
  Said material shall be exploited only
and exclusively in benefit of those public works target of the free
exploitation. Their use in other purposes shall constitute an unlawful act which
shall be submitted to the stipulations of this Law.
  The State contractor shall not include in his
costs the amounts corresponding to the materials of construction freely
exploited.  In the event of proving the free exploitation for other
purposes, he shall be sanctioned with a fine equivalent to 200 basic
unified wages and in case ofrecurrencewith the termination of the contract
for said public work.
  Free exploitation concessions, are
subject to the accomplishment of all the provisions of this Law,especiallythose of environmental
nature.
  Those contractorswhoexploit free exploitationareasare required to the accomplishment of
the Plan of Environmental Management.
  Chapter IV
  NON METALLIC
MINERALS
  Art. 145. -Exploitation of Non
Metallic Minerals. -The
exploration and exploitation of non metallicmininghaveto comply with the general regulations
applicable to mining concessions in the terms set forth by this Law,including the payment of
royalties.
  The General Regulation of this Law shall
definethe characteristics
of non metallic substances and the methodof participation of the State in the
profits, pursuant to item 2 of Art. 408 of the Constitution of the
Republic.
   32
  The interest of the State shall be taken
into account in regard of the use of said non metallic minerals in the
construction of works of infrastructure of national
benefit.
  ChapterV
  MINING ACTIVITIES ON THE SEA
BED
  Art. 146.-Research
and operations on the sea bed.- The exploitation of mineral
substances of any kind in marine waters and on the sea bed is in charge of the
National Institute ofGeological, Mining and Metallurgical Research, and the National Mining Company
which may celebrate special agreements of research and service contracts,
respectively with natural persons or legal entities, local or foreign companies
subject to the requisites and conditions established in the
Special Regulation which shall be dictated by the President of the Republic for
these purposes.
  Title X
  TAXATION AND ECONOMIC
DISPOSITIONS
  Art.
147.-  Accelerated depreciation.-Title holders of mining rights who
havecelebrated a Mining
Exploitation Contract, are authorized to request Internal Revenue Service
(S.R.I) a special treatment of accelerated depreciation for those fixed assets
which have a shorter useful life as a consequence of the larger wearing away
produced in the operation of a mining
project. Internal Revenue Service (S.R.I) after a previous report presented by
the Agency of Control shall approve or reject the petition.
  Assets susceptible of accelerated
depreciation are those listed in the General Regulation under this
Law.
  Art. 148. -SimplifiedTaxRegime for small
scale artisan miners. -Small scale artisan miners can adopt the
SimplifiedTaxRegime for the Income Tax and the Value
Added Tax in the conditions, terms and requisites set forth in the
Internal Tax
Law.
  Art. 149. -Gold
purchase. -Gold purchase
by Banco Central del Ecuadorhasa zero taxed rate.
  Title XI
  ADMINISTRATIVE,CONTENTIOUS ADMINISTRATIVE AND COACTIVE
JURISDICTION
  Art. 150. -Jurisdiction and
venue.-The Agency of
Mining Regulationand
Control shall exercise jurisdiction and competence on mining with the functions
and attributions conferred on them by the present Law and its General
Regulation.
  Any controversies that may arise between
those subject to mining law and administrative authorities on mining matters shall be
resolved by the District Tribunals of Contentious Administrative
Affairs.
  In any case the provisions in regard
with the jurisdictional guarantees shall be observed, jointly with the action of
protection, of access to public information and rights of
protection set forth in the Constitution of the Republic.
  Art. 151.-Coactive
jurisdiction. -Internal Revenue Service (Servicio de
RentasInternas)shall exercise coactive power for the
collection of patent fees, taxes, overdue payment surcharges, fines and other
charges such as processing costs derived from collection.
   33
  Title XII
  PROCEDURES FOR WAIVER AND RELINQUISHMENT
OF MINING RIGHTS
  Art. 152. -Waiver and
relinquishment of mining rights.- Rights to one or more mining
hectares contained within a
mining concession may be waived and relinquished only when this waiver does not
prejudice the rights of third parties. Total or partial waive and relinquishment
shall be subject to the General Regulation.
  Art. 153. -Voluntary
orcontentious venue-
Relinquishmentconstitutes
a process of voluntary jurisdiction, which can become conflictive if such act is
appealed by third persons claiming damage.
  Art. 154. -Request of
waiver. -The petition for the waiver
shall be presented to the
relevant Ministry in the corresponding jurisdiction and contain an express
request to order the cancellation or modification of the respective
registrations, depending if the waiver is total or partial. The General
Regulation shall also set forth the requisites and proceedings for its
proceeding and resolution.
  Art.
155.-Authentication.-  After the approval of the
waiver, it shall be registered in a Notary ́s Office and it shall be recorded in the
Mining Register kept in custody of the Agency of Mining Regulation and
Control.
  Art. 156. -Rights of third
parties.-If it appears
from the initial papers that the waiver affects or might affect the rights of
third parties, the relevant authority shall order thewaveringparty to evidence by public
instrumenttheir consent to
the waiver.
  If there is no consent from third
parties, the relevant Ministry ́s official shall order that third
parties be noticed by publication, one time only, in a newspaper of national
circulation, and if there is any, of local circulation.
  Art. 157. -Opposition.
-Legal means
for objecting to an attempt to resign shall include the following:promissorysale contracts, mortgage, financing,
lease, exploitation, contracts of sale of minerals, and embargoes in regard with
the concessionwhich
includes the mining hectares waived.
  In the submittal of a claim of
opposition, the administrative proceeding shall be performed before the relevantMinistry;their decision may be appealed to the
superior authority within 5 days of the notificationof the parties
involved.
  Art. 158. -Approval of waiver.-Once the resolution
approving the modification of the area is approved and recorded in the Mining
Register, the waiving party shall provide a certified copy to the Regional
Ministry ́s Office of
Mining for the modification
of the National Concession Map.
  GENERAL DISPOSITIONS
  FIRST.- In the event that radioactive
minerals or substances are found in economically exploitable concentrations as a
result of any activity described in this law, the owner ofthe mining right has to report the
finding immediately to relevant Ministry.
  SECOND. -The failure to comply these provisions
established by Law shall be punishable by the relevant Ministry with the
imposition of a fine of no less than 20 minimum monthly salaries and no more than 500 plus 0.1%
of investment depending to the gravity of the infraction. Without prejudice to
any other legal or penal action that could result from these
actions.
  The right to defense of the allegedviolatorsshall be respected inevery case. Fines will be deposited in
legally established agencies to receive such funds.
  THIRD. -The Internal Revenue Service (Servicio
de Rentas Internas) shall collect the values corresponding to Patents and
Royalties referred to in this Law, and it is invested with all the faculties and
attributions granted by the Law of
   34
  Creation and theTax Code for the collection of taxes,
including the coercive jurisdiction ruled in the Tax Code.
  in Ecuador and this Law.
  FOURTH. -Thoseadministrativeacts thatwere terminated or expired, as effect of
Mandate No. 6, are executed.
  FIFTH. -Anyenvironmental damage shall generate
objectiveresponsibility.
  SIXTH. -Any and all kind of mining activity in
zones declared ancestral territories of the people in freewillisolation is banned, in accordance to
the provisions set forth in the Constitution of the
Republic.
  SEVENTH. -Public officials and workers who are
responsible of administrative silence shall be administratively and civilly
penalized, depending on the gravity of their violation. If the
assumptions of criminal responsibility of the official whoseomissiongeneratedadministrativesilence are proved, legal action can be
brought against the official involved.
  In case the relevant Ministry does not
issue a corresponding
resolution in the terms set forth in this Law, positive administrative silence
shall be produced, which shall be substantiated judicially at the relevantContentious
AdministrativeTribunal.
  EIGHTH. -  In the
Province of Galápagos no mining activity shall be performed with exception of
the free exploitation of construction materials.
  TRANSITORY
DISPOSITIONS
  FIRST.-Mining concession title holder who
preserved their concessions under Art. 8 of the constituent Mandate No.6shall keep their miningrights and are authorized to restart
their activities.  In the term of 120 days, starting on the effective
date of the respective regulations all mining concessionaires have to regularize
and harmonize their proceedings in accordance with the regulationhereof.
  In the case of owners of processing
plants presently inoperation, theyhave to adapt them to the regulationin forcewithin a year starting on the effective
date of this Law.
  The failure to comply with this
disposition shall terminate the mining title, and consequently the lapsing of
the mining concession or a processing plant granted before the present
Law.
  SECOND.-After publishing  this Law in
the Official Register, thePresident ofthe Republic through an executive
decree shall dispose the practice of the administrative acts for the
integration, organization, regulation and control of the organisms created in
it, in the meantime the National Directorate of Mining, Regional Directorates of
Mining and  the Directorate of Mining Environmental Protection shall exercise temporarily the
attributions and functions of the Agency of Mining Regulation and the National
Directorate of Geology the functions of the NationalInstituteof Geological, Mining and Metallurgic
Research, as long as  they do not oppose to the regulations of this
Law.
  THIRD.-In the term of 90 days, Land Registrars
starting on the effective date of the respective regulations have to submit to
the AgencyofminingRegulation and Control all the
information and original files of mining concessions registered and any other
proceedings concerning mining activities. Acts and proceedings to be performed
at the MiningRegistershall be subject to the regulations of
the Law of Registry, in the extent they are considered
applicable.
  FOURTH. -In the term of 120 days, starting on the
effective date of the passing of the new Law, the respective regulations shall
be promulgated.
  FIFTH. -In the term of 90 days, starting on the
effective date of the passing of the new Law, the Ministerial Agreement
shall be issued by the
relevant Ministry containing the conditions and terms of time for the
restitution of the mining areas and projects referred to in Art. 25, finalitem.
   35
  SIXTH. -In a term of time of 180 days starting
on the effective date of this Law, the Executive shall send to the National
Assembly the Project of Law of Fomentation, Participation and Training to Small
Scale and Artisan Mining.
  SEVENTH. -In a term of time of 180 days the
Executive shall send theindependentregulations to guarantee
safety, health and the
environmentin the zones of
Josefina, Portovelo and Nambija.
  EIGHTH. -In the term of 180 daysstarting on the effective date of the
passing of the new Law, the relevant Ministry shall conduct a census of artisan
miners who lack of theauthorizations to perform mining
activities and who can prove that they worked at least two years before theconduction ofsaid censusin orderto be regularized.
  NINTH.-Processing plants that ontheeffective date of this Law have the
permits and are inoperational status with the
capacity installed below to the one provided above shall be authorized to
continue with their operations after obtaining the environmental permit in the
terms determined by this Law and its Regulations.
  FINAL DISPOSITIONS
  FIRST.-
Derogations: Abolish the Mining Law 126 published in the Official Register
Oficial No. 695, supplement of May 31, 1991 and its regulations and the Law
Decree 2000 of the Law for the Promotion of Investment and Citizen
Participation, published in the Supplement of the Official Registry No. 690 of
August 18, 2000 and all legal provisions that oppose to the present
Law.
  SECOND.-
Termof Validity.- This law will  become effective upon its publication
in the Official Register. Its provisions shall prevail over other general and
specific laws until such time that another law is passed to change or repeal
this Law. In consequence, laws or decrees that contradict this precept or those
established in the Constitution shall not be applicable.