Is Mexico set to become a gold superpower?

With the Olympic Games in London just a couple of months away, all competing nations will soon be focusing on gold – winning as much of it as they can. Until then, one unexpected Latin nation is focusing on gold too, but much closer to home.

Matthew Piggot, a mining analyst with Thomson Reuters GFMS, is projecting that Mexico – which only this past year made Bloomberg’s Top 10 list of gold producing countries— may be the next source of “mega” gold deposits.

Accounting for this are expected yields at two projects owned by Canadian companies based in Vancouver: the Ana Paula mine owned by Newstrike Capital Inc., in the Guerrero gold belt; and the Charay gold property in western Mexico owned by Westridge Resources Inc.

The Ana Paula project has the potential to yield more than three-million ounces of gold, with significant upside as exploratory drilling is only about halfway complete, according to Mining Weekly.

Located about four hours from Mexico City, the Guerrero gold belt is a newly established gold district, also hosting Goldcorp’s Los Filos complex – the largest gold mine in Mexico with proven and probable resources of 7.7-million ounces – and Torex Gold Resources’ Morelos project.

The same report quotes Westridge CEO Peter Schulhof as saying that when his company acquired the Charay gold property, the Padre-gold vein was thought to be only about 250 m in length. Subsequent drilling had expanded the gold/silver resource to multiple veins over a 4 km area, with gold grades of between 2 g/t and 20 g/t.

Westridge has, to date, explored about 1% of the 105 km2 tenement, with Schulhof unofficially expecting the resource to hold about five- to six-million ounces of gold.

And, according to Piggot, this may just be the tip of the proverbial iceberg.

“With a number of projects ramping up to full production and many more projects being evaluated, we expect production to increase to about 100 t over the next five years,” he was quoted as saying.

Mexico is already the world’s main silver producer and if analysts are right, the country will become a key player in the gold market in the next five years.

In addition to its gold deposits, Mexico is a very attractive mining destination because it is one of the lowest-cost mining jurisdictions in the world. For example, in Mexico it costs an average of $325 to produce an ounce of gold, whereas in the rest of the world, the average is $649 per ounce.

(Image: Mexican fifty centavos gold coin)

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With the contribution of Suzanne Soto, owner of Si! Corporate Communications, a Greater Toronto Area company providing public relations services in both English and Spanish.