Latin America: Six Gold
Amass 100-Million-Plus Ounces
Marc Davis, www.BNWnews.ca
Latin America represents the world’s last great mineral frontier for prolific
gold discoveries due to its vast land mass and its geologically fertile terrain.
This is proving to be a godsend for some lucky investors, while others have seen
their luck turn to shattered dreams.
drama all began with the Spanish Conquistadores, who failed in their efforts to
locate the fabled Eldorado (“the golden one”) – a mythical lost city brimming
with golden riches. However, a peaceful modern-day invasion of intrepid gold
seekers is breathing new life into the world’s greatest ever treasure hunt – and
they’re proving that there’s some truth to Eldorado’s lustrous legend.
Armed with large amounts of cash, sophisticated technology and shrewd geological
acumen, a handful of small to large sized mining companies are finally revealing
the secret to finding South America’s most prolific gold riches. All of which
are clustered either in the northern territories of the continent or in its
southern reaches, rather than conveniently concentrated in one Eldorado-like
Several of the world’s largest gold miners are at the forefront of this epic
“New World” gold rush. The ranks of the various other hopefuls are mostly made
up of small boom-or-bust gold exploration/development juniors. A select few have
already hit the geological jackpot.
include the Canadian gold junior Aurelian Resources. It made the
headline-grabbing Fruta del Norte gold discovery in Ecuador in 2006. Thanks to
this high-grade 13.7-million-ounce deposit, the company’s share price
skyrocketed from around $0.25 to over $40. This was before the deposit was
purchased in 2008 by the mining heavyweight Kinross Gold Corp. (TSX: K) (NYSE:
KGC) for the princely sum of $1.2 billion.
date, a total of six other gold juniors have each found world-class gold
deposits, weighing-in at 10 million ounces or better. Unfortunately, three of
these lustrous projects are in Venezuela, which is proving to be fraught with
major political risk for asset-rich gold companies. And just last month,
unforeseen political events in Columbia essentially derailed a fourth company.
More on all of this later.
leaves Chile, where two major gold finds are shaping up nicely without any
political bumps in the road – so far. They include what is arguably the most
promising of all of Latin America’s gold-copper discoveries of the past couple
of decades – the huge Caspiche deposit.
Owned by Exeter Resource Corp. (TSX.V: XRC) (NYSE-A: XRA), the Caspiche
gold-copper deposit in northern Chile’s prolific Maricunga gold belt is a
veritable monster that weighs in at 24.3 million gold ounces. This figure
entails resources in the largely reliable but not definitive “indicated
category,” as well as the more approximate “inferred category”.
deposit is situated at the heart of the ruggedly mountainous Maricunga gold
corridor, where over 100 million ounces of gold is concentrated and is mostly
owned by mining heavyweights Barrick Gold (TSX: ABX) (NYSE: ABX), Goldcorp Inc.
(TSX: G) (NYSE: GG) and Kinross Gold. Only the Cerro Casale gold mine
in-the-making is still larger than Caspiche. Jointly owned by Barrick and
Kinross, this monster deposit boasts a 26.4-million-ounce gold resource. But
Caspiche is still growing in size (due to continued drilling success) and its
management suggests that the company has yet to define the limits of the
Andina Minerals (TSX.V: ADM) is the other mining junior that is also making
solid headway in the Maricunga gold belt. Its Volcan Gold Project, which
consists of three closely grouped deposits, add up to 9.77 million ounces in the
very reliable “measured and indicated category,” as well as a further 768,000
ounces in the inferred category. These deposits – which could all be encompassed
into a single mining operation – are still getting larger, according to Andina
Minerals president George Bee.
Second in size only to Exeter’s Caspiche deposit among the six gold juniors is
the 16.8-million ounce Las Cristinas deposit in Venezuela. This controversial
world-class gold discovery is owned by Toronto-based Crystallex International
Corp. (TSX: KRY) (NYSE-A: KRY).
Unfortunately for the company’s shareholders, the project’s development was
stopped dead in its tracks in mid 2008 by the left-wing, anti-capitalism
government of political firebrand Hugo Chavez. The company was ready to build a
low-cost 250,000 ounce a year mine. In late 2009, the company reported that it
was still at an “impasse” with regards to the Venezuelan government’s refusal to
issue it an environmental permit. Crystallex’s share price has been in the
doldrums for nearly 18 months, at a fraction of its former valuations.
Another victim of Chavez’s capricious government is Spokane, Washington-based
Gold Reserve Inc. (TSX: GRZ) (NYSE-AMEX: GRZ). Its Brisas project hosts 11.8
million ounces of gold and approximately 1.6 billion pounds of copper in the
measured and indicated category, and 2.28 million ounces of gold and 316 million
pounds of copper in inferred category. Over the past 17 years, the company has
invested over $300 million in what constitutes one of the world’s largest
undeveloped gold-copper deposits.
Reserve was on the verge on commencing mine construction when it too was
“arbitrarily” thwarted in early 2008 by Venezuelan authorities, according to the
company. The company’s share price has languished ever since then and its
frustrated management is pursuing an international arbitration claim against
Another setback for the junior gold sector came just several weeks ago when
Vancouver-headquartered Greystar Resources (TSX: GSL) found itself suddenly
stymied in its bid to make a lucrative mine out of its Angostura gold-silver
deposit in Columbia.
a resource totaling about 11.55 million gold ounces in the measured and
indicated category and a further 3.37 million ounces in the inferred category,
this is a major setback for a project that has been 15 years in the works.
Unexpected changes in Columbia’s mining code have placed much of Greystar’s gold
resources off-limits as they encroach on an environmentally-sensitive area.
Greystar’s share price has also taken a precipitous tumble over recent trading
last of the select small group of gold juniors in South America with
10-million-ounce-plus gold resources is Vancouver-based Rusoro Mining. (TSX.V:RML).
An already established gold producer in Venezuela, the company has mitigated
much of the political risk there by partnering up with the regional government
of Bolivar State for its producing Isidora mine – the larger of its two mines.
The company’s proximal properties in the El Callao and El Dorado gold districts
benefit from collective resources of 7.1 million ounces of gold in the measured
and indicated category and a further 7 million ounces in the inferred category.
of these emerging gold deposits represent rich veins of opportunity for
supply-hungry major gold producers that are beginning to circle around
prospective takeover targets. This is especially the case as the relative
scarcity of world-class gold discoveries in recent years is already taking a
toll on the mining industry’s bottom line. Global gold output has been
dwindling by nearly 5% per annum since it peaked in 2001, even though bullion’s
spot price has virtually quadrupled since then.
Courtesy of BNWnews.ca, whose principals do not own shares directly or
indirectly in any of the companies mentioned in this article.