September 10, 2025, Ecuador’s Ministry of Environment revoked the environmental license for the Loma Larga gold project in Azuay, citing hydric risk and applying the precautionary principle under the Constitution. Only a few months earlier, DPM Metals had secured that same license after completing an Environmental Impact Assessment (EIA) that met every procedural requirement under the Código Orgánico del Ambiente.
The project has (had!) an after-tax NPV of $488 million, and is now annulled by the authorities.
The reason was water!
Local authorities concluded that the mine area lies within a hydrologically fragile páramo system and that downstream water intakes could be at risk. The Ministry accepted those findings and revoked the license.
This was not simply an Ecuadorian political dispute. It revealed how two different regulatory systems, the host country’s permitting framework and the international disclosure standards that govern mine valuation, leave a common blind spot.
Ecuador’s EIA process is administrative. It verifies that studies exist, that impacts are identified, and that mitigation and consultation procedures are in place. What it does not do is technically validate whether for example the project’s design can withstand real hydrological or seismic conditions. A mine can be fully compliant on paper and still structurally or hydrologically exposed.
At the same time, Canada’s NI 43-101 standard, which governs the public disclosure of scientific and technical information on mineral projects for investors, focuses on geological and economic confidence but not on local regulatory or hydrological exposure. The 2021 Loma Larga NI 43-101 feasibility report met every disclosure requirement but no reference to Ecuador’s constitutional provisions on the rights of nature on water was made.
Its Qualified Persons were international consultants acting under Canadian securities law, not local experts within Ecuador’s environmental regime.
Both frameworks operate correctly within their own logic. And both fail to connect the legal, physical, and financial dimensions of water risk.
When a project can lose its environmental license because of hydrological uncertainty, yet remain “compliant” under NI 43-101, the regulatory interface is incomplete. Investors, engineers, and regulators are using parallel systems that describe different realities of the same project.
Water is where those systems meet. It is the point at which physical risk becomes legal, financial, and social exposure. Loma Larga is a reminder that the credibility of a mine valuation depends on how water risk is understood, modelled, and disclosed across jurisdictions. Until regulatory systems integrate that dimension, projects will continue to meet every formal requirement, and still fail.
First published on Linkedin September 2025.
References:
Loma Larga NI43-101 Technical Report (2021)
DPM Metals Project description and EIA documentation
DPM Metals responds to revocation of the Loma Larga environmental licence