Tuesday, August 12, 2025
(Toronto, Cuenca) – A perfect storm has hit Dundee Precious Metals’ (TSX:DPM) on the eve of its Special Shareholders Meeting. Today, Law Professor Shin Imai filed a complaint against the company before the Ontario Securities Commission (OSC) over its failure to disclose material information to its shareholders about serious legal threats related to an ongoing court-ordered suspension of its Loma Larga mining project in Southern Ecuador, which could result in further lengthy delays or even the definitive closure of the project.
The complaint comes on the heels of a recent announcement from the Ecuadorian Minister of Mines and Energy’ that the suspension of the Loma Larga project will continue until Dundee’s Environmental Impact Study has been adequately disseminated to the public. One of the company’s largest investors, BlackRock Inc has already taken action to reduce its risk exposure, decreasing its percentage holdings from 12.35% to 8.48% last month.
Dundee’s Obligations under Ontario Law
The OSC complaint, filed on behalf of MiningWatch Canada and 22 Ecuadorian partners, alleges that Dundee has misled its shareholders in its July 7th press release, by failing to disclose that its 2022 court-ordered suspension has still not been lifted. Ongoing legal proceedings related to potential impacts on drinking water quality in downstream communities and irregularities in its Indigenous consultation process could lead to further years-long delays and even a definitive closure of the Loma Larga project. In the last few years, Ecuadorian courts have ordered the suspension and closure of mining projects for environmental reasons and for lack of social license in legal cases with strong parallels to the ones Dundee is currently facing.
In a precedent set in the case of Dyck v. Tahoe Resources, the Ontario Superior Court found that companies are obligated to disclose to its shareholders the possibility that a court proceeding could result in lengthy delays or suspension. In that case, Tahoe disclosed that it had been sued, but said that the suit was “without merit”. The company omitted to disclose that the suit asked for closure of the mine, and that there were legal precedents in Guatemala for mine suspension. When the mine was indeed suspended a few months later, Tahoe lost $CDN 1.1 billion in value in one day. The mine is still closed, eight years later.
Dundee’s pattern of lack of disclosure holds direct similarities to the Tahoe case. When the court ordered the interim suspension in February 2022, Dundee called it a “pause” and said that the action was “without merit”. The company has not disclosed the relevant legal precedents for mine suspension in Ecuador, where other projects have been suspended on similar grounds. In its outdated 2020 feasibility study (NI 43-101), Dundee says that “there are currently no environmental and social considerations that pose a material threat to the project”.
Reactions to OSC’s complaint:
“Dundee is still relying on an outdated 2020 feasibility study (NI 43-101) inherited from the previous owner of the project, which claims that there are currently no environmental and social considerations that pose a material threat to the project. Yet Dundee appears to have done little more than fight court cases since it acquired the project. Dundee needs a new NI 43-101 that takes into account the financial implications of lengthy delays or suspension of the mine,” Shin Imai, Law Professor at Osgoode Hall
“As the Indigenous Kichwa Cañari community of Azuay, we can say without a doubt that there was no consultation, contrary to what the Chamber of Mining has falsely claimed. It is surprising that they claim 100% of the Indigenous community of Escaleras supported the consultation. Our position is very very firm, and we will ensure that the constitution is respected. Now more than ever, we remain steadfast in our 30 years of struggle. As the defenders of Kimsacocha, we are making history to definitively prevent mining from entering our sacred páramos,” Lauro Sigcha, president of the Federation of Campesino and Indigenous Organizations of Azuay (Federación de Organizaciones Indígenas y Campesinas del Azuay - FOA in Spanish)
“Our water sources originate in the Kimsakocha páramo. This new international action before the Ontario Securities Commission against Dundee Precious Metals complements the legal and social struggle we have been waging here in the province of Azuay to stop this mining project and defend our water, páramo, and nature,” Hortencia Zhagui, Potable Water Administrators of Victoria del Portete and Tarqui and Kimsakocha Women’s School of Agroecology.
“Dundee has made an enormous effort to hide all the social opposition and repeated judicial and administrative defeats that its “Loma Larga” project has suffered from its investors, in addition to two binding referendums that have banned mining in the area where the company operates. All of this undoubtedly makes the project a very high-risk investment,” David Fajardo Torres, lawyer at Cabildo por el Agua de Cuenca.
“Less than a year after Dundee acquired Loma Larga, the project was suspended by a local court – a court order that still has not been lifted. Investors need to know that these and other ongoing legal challenges could lead to a permanent closure of the mining project, resulting in major financial risks for them,” Viviana Herrera, Latin America Program Coordinator at MiningWatch Canada.
Documents:
For more information or to set up interviews with organizations in Ecuador, contact:
- Shin Imai, professor emeritus, Osgoode Hall Law School, simai@osgoode.yorku.ca or + 1 (647) 524 2312
- Viviana Herrera, Latin America Program Coordinator at MiningWatch Canada, MiningWatch Canada: viviana@miningwatch.ca or +1 (438) 993-1264
- David Fajardo Torres, Lawyer, Cabildo por el Agua de Cuenca. David.kuska@outlook.com +593 987075453
Further background
Lack of social license
In a press release issued July 7th 2025, Dundee announced the receipt of an environmental license from the government of Ecuador, citing the completion of a successful consultation in the Indigenous community of San Pedro de Escaleras near the project. The Ecuadorian Chamber of Mining made the improbable claim that 100% of the community agreed to the mine. These claims were immediately disputed by members of the community who said they were not consulted. Dundee has failed to disclose to its shareholders that the validity of the consultation process is now being challenged in the ongoing court proceedings. If the consultation is found to be faulty, there could be lengthy delays as consultation with Indigenous people is a constitutional right in Ecuador.
Dundee has never disclosed the degree of community opposition to the Loma Larga project. There have been numerous protests, referenda and press statements from communities. For example, a referendum in the neighbouring community of Giron in 2019 forced the previous owner of the Loma Larga project to move the location of its proposed gold processing plant. Most recently, the city of Cuenca which is downstream of the project voted overwhelmingly against mining in 2021. These votes are important to disclose because of an Ecuadorian court ruling in 2018. In that case the court suspended the Rio Blanco mining project, located less than 100 km north of Dundee’s Loma Larga project, because about two thirds of the residents of a neighboring community voted against mining.
Safe drinking water for downstream communities
The Loma Larga project is located in the ecologically sensitive Kimsakocha páramo. This high-altitude Andean wetland is crucial for climate change adaptation and water security for downstream communities, including Cuenca, the third-largest city in Ecuador.
The company’s recent press release stated that the requirements of the 2022 provincial court ruling suspending the mine had been met. However, Dundee did not disclose that the ruling ordered not only an Indigenous consultation process, but also an investigation into safe drinking water guarantees for downstream communities - including the city of Cuenca. The court ordered reports from the Ministry of Environment, Water and Ecological Transition (MAATE) as well as the utility company for the municipality of Cuenca, ETAPA, about the mining project’s impacts on drinking water. ETAPA’s report concluded that Loma Larga “is not viable” due to the “potential and irreversible risks” to the Kimsakocha páramo and water consumption.
Until the two reports are accepted and reconciled, the project remains suspended - for what could be several years of protracted legal battles as the appeals and procedures wind their way to the Constitutional Court of Ecuador. The OSC complaint contends that this could result in a ruling to permanently close the mine, as in the Los Cedros case in 2023 where the Ecuadorian constitutional court revoked the water and environmental rights of a Canadian mining company Cornerstone Capital due to its impacts on constitutionally protected environmental rights.
On Wednesday, August 6th, the Ecuadorian Minister of Mines’ announced that the suspension of the Loma Larga project will continue indefinitely, until Dundee’s Environmental Impact Study of the exploitation phase of the project is published and has been adequately disseminated to the public.