"When it comes to gold, silver and copper, most of the juniors are putting their money in provinces with a favorable framework to mining, especially Santa Cruz, San Juan and Salta."
Argentina and the Mining Opportunity - A Top Exploration Destination.
Thursday, 21 October 2010
Argenina-On the Map of Multinationals - a Top Exploration Destination.
Argentina's vast territory offers unmatched geological potential. As the industry overcomes the financial crisis, companies dedicate funds to exploration, while advanced projects become new mines.
Coupled with strong commodity prices, Argentina is experiencing a new exploration boom. Between 2003 and 2008 the number of meters drilled increased fourfold (166,000 m to 668,000 m) only to decrease in 2009 due to the crisis. Now industry leaders are once more very optimistic. There are players with advanced projects as well as a handful of grassroots exploration companies. According to Julio Rios, president of exploration trade association GEMERA, 75% of Argentina's land with geological potential remains unexplored. For Lucas Garcia, lawyer at Beretta Godoy, it is the right time to invest. "Whoever builds up a good portfolio of projects now will have an invaluable advantage in 10 to 15 years time," Garcia said.
When it comes to gold, silver and copper, most of the juniors are putting their money in provinces with a favorable framework to mining, especially Santa Cruz, San Juan and Salta.
Santa Cruz: The Potential of the Deseado Massif.
Santa Cruz, in the Patagonia region, is currently a hot destination. It hosts the Cerro Vanguardia gold mine as well as advanced gold projects including Andean Resources' Cerro Negro, Extorre Gold Mines' Cerro Moro and Minera IRL's Don Nicolis, all located in the Deseado Massif. Discoveries in the area have acted as a magnet for grassroots exploration companies.
Cerro Negro has recently switched hands as Goldcorp of Canada has acquired Australian company Andean Resources for a substantial $3.4 billion. Cerro Negro has indicated resources of 2.5 million oz gold and 23.5 million oz silver, with additional inferred resources.
Before the announcement of the merger, Alberto Carlocchia, director of legal and institutional affairs at Oroplata, Andean's Argentinean subsidiary, provided a more detailed account. "We are considering an annual output of up to 285,000 oz gold for the first five years and a mine life of 10 years initially; a period that should be extended," Carlocchia said. "We are going to start with the Eureka target, which contains more than 1 million oz and is quite deep. The Bajo Negro target is also underground. The Vein Zone would be an open-pit operation, although this should come into the mine plan much later in the project. The average grade of the Eureka and Bajo Negro veins is between 8 and 12 grams per ton." Andean's estimated capital investment to build the mine is $275 million.
Extorre Gold Mines is a spinoff of Exeter Resource�s Argentinean assets, Cerro Moro currently being the most important one. The gold-silver project has an indicated resource of 612,000 oz gold equivalent (357,000 oz gold and 15.3 million oz silver) and an inferred resource of 390,000 oz gold equivalent, all from the Escondida vein with an average grade of 32.3 g/mt gold equivalent. "Cerro Moro is a high grade gold-silver project which we should be able to put into production for a relatively modest cost - perhaps around $100 million - and within a relatively short time frame," said Eric Roth, president and CEO, Extorre. If there are no permitting issues, Roth expects to see first metal production in the second half of 2012. State entity Fomicruz will have a 5% stake in the project.
Another upcoming mine in the Deseado Massif is Don Nicolis, a project that Peruvian-based Minera IRL acquired through the takeover of Hidefield Gold. The company is currently taking the project through feasibility with a 360,000 oz gold resource (indicated plus inferred). The idea is to put the mine into production by late 2012 and to have an annual output of 60,000 oz/y gold.
Exploration.
Due to a mining-friendly framework and great geological potential, the province of Santa Cruz seems to be securing a number of successes in the medium term. One of the latest grassroots discoveries in the area is Las Calandrias, a project that has significantly raised the profile of its owner, Mariana Resources. "Las Calandrias was a very rapid development for us," said Gustavo Rodriguez, exploration manager, Mariana Resources.
"It was staked as open ground in April 2008 and the discovery was confirmed in follow-up drilling earlier this year," Rodriguez said. "We now have another 10,000 m ready to go, so we are aiming for a maiden resource in late 2010 or early 2011. It is an unusual deposit for Santa Cruz, in that it has both bulk tonnage potential at Calandria Sur and bonanza vein potential at nearby Calandria Norte."
Mariana has other properties elsewhere in Argentina as well as in Chile, yet the province of Santa Cruz, where it also has Sierra Blanca (a joint venture project with IAMGOLD) is the main focus of the company right now. "Years ago agriculture was important in Santa Cruz but in 1991 a volcanic eruption reduced sheep farming drastically with a blanket of ash over the province. The development of the mining industry is filling the gap," Rodriguez said.
Another company active in Santa Cruz is Hunt Mining through its Argentinean subsidiary, Cerro Cazador. Its main project is the 91% owned La Josefina gold-silver project, currently with a resource of 204,117 oz gold equivalent (indicated plus inferred). The company is currently investing around $3 million to certify the pre-existent data on the property, while it is also waiting the answer to its $5 million offer to participate in Fomicruzi Valenciana project.
"In the period of the colony there was exploration by the Jesuits in the center and north of Argentina, but not in Santa Cruz," said Hunt Mining's General Manager in Argentina, Danilo Silva. "This is why there are so many areas that are completely unexplored. The potential of the Deseado Massif has materialized since the discovery of Cerro Vanguardia and the development of the San Josi and Martha mines, while Cerro Negro and Cerro Moro, two high-grade projects, are close to production. High-grade guarantees stability because projects are feasible even at crisis times."
"In the plateau there are no high altitudes and the road infrastructure is very good so entrance costs are not very expensive," Silva said. "We are persuaded that Santa Cruz is the place to be."
The poly-metallic nature of Hunt Mining's La Josefina project is replicated in other parts of Santa Cruz, even with some surprises. Argentex Mining's Pingino project, for instance, also contains indium, a strategic mineral used in flat screen TVs or thin-film solar cell technology. "Pingino is unique for several reasons. The strangest thing is that the poly-metallic has indium content," said Ken Hicks, president of Argentex Mining.
"There are only seven examples of epithermal indium projects in the world. After we discovered the indium in 2007, many companies started to look for this mineral in Patagonia, but none have found similar amounts," Diego Guido, technical advisor said. The project already has an initial 43-101 resource estimate.
At the grassroots level, a significant company in Santa Cruz is Mirasol Resources, whose team did the first helicopter reconnaissance in the province in the 1990s. According to Timothy Heenan, exploration manager and director, the aim of Mirasol is to look for brand new prospects and bring them up to first phase drilling. The company has relied on a number of joint ventures since its foundation in 2003, but as it receives more solid financial support from investors it expects to develop more projects on its own, Heenan said.
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