South America snapshot: Eight companies advancing assets
With its vast mineral potential and pro-mining business environment, South America has long been a home away from home for North American-listed mineral explorers, developers and miners. Here is a look at eight such companies that are active at gold projects and mines.
Toronto-based Aurania Resources (TSXV: ARU) is exploring for gold at its Lost Cities project in southeastern Ecuador in the Cordillera del Cutucu region, which is contiguous with the Cordillera del Condor. The Cutucu forms part of the Northern Andean Jurassic metallogenic belt, which contains clusters of porphyry copper, gold-copper skarn and epithermal gold deposits.
Jean-Paul Pallier (left), Aurania Resources’ vice-president of exploration, and Richard Spencer, president, discussing stream sediment sampling techniques at the Lost Cities-Cutucu gold project in Ecuador. Credit: Aurania Resources.
In an update in early May, Aurania reported that its first scout drilling program at Crunchy Hill on the property indicates an epithermal gold-silver system and epithermal-related alteration, though no significant vein systems were intersected.
Corporately, developments this year include: Aurania entering an agreement with Aurania chairman and CEO Keith Barron, providing for an unsecured loan of up to US$3 million (not convertible into Aurania shares); Barron turning a 2018 convertible debenture into 877,192 common shares, and extending the maturity date of a 2017 promissory note to May 29, 2020; Aurania finishing a rights offering for gross proceeds of $5.3 million from 1.95 million shares issued; and Aurania paying US$2 million to the Ecuador government to renew its 42 mineral concessions.
The junior notes that its reconnaissance exploration program is 40% complete, with seven dedicated teams, and access agreements signed with 67% of the communities located within the project area.
Toronto-based, Ari Sussman-led Continental Gold (TSX: CNL) describes itself as “the most advanced, large-scale gold mining company in Colombia,” as it develops its wholly owned Buritica gold mine project in Antioquia for scheduled production in 2020.
Continental Gold’s Buritica gold project in Colombia. Photo by David Perri.
Miners at Buritica will soon tap into reserves of 13.7 million tonnes grading 8.4 grams gold per tonne, or 3.7 million oz. gold. A recently updated resource estimate tallied 16 million measured and indicated tonnes grading 10.32 grams gold per tonne, or 5.32 million oz. gold, plus 21.9 million tonnes at 8.56 grams gold for 6.02 million oz. gold.
Continental says Buritica is a “rare combination of size, grade, straightforward metallurgy, excellent infrastructure, and growth potential,” and that according to an updated technical report released in March 19, Buritica “will be a lowest-quartile cost producer and an economically robust mine,” with the “potential to approximately double the formal production of gold in Colombia, and become the largest single gold mine in the country.”
Golden Arrow Resources
Golden Arrow Resources (TSXV: GRG), part of the Vancouver-based Grosso Group, owns a 25% share of Puna Operations Inc., a joint venture with SSR Mining that owns the Chinchillas open-pit silver-lead-zinc mine in Argentina. Golden Arrow discovered the Chinchillas deposit and delineated it between 2012 and 2015, and the partners put it into commercial production on Dec. 1, 2018.
In the first quarter of 2019, Chinchillas produced 2.4 million oz. silver, 6.8 million lb. lead and 1.6 million lb. zinc. Mineralized material processed during the quarter contained an average grade of 235 grams silver per tonne, and silver recoveries reached 91.7%.
Drillers at Golden Arrow Resources Chinchillas silver-lead-zinc property in Argentina. Credit: Golden Arrow Resources.
In addition to Puna Operations, Golden Arrow has a portfolio of more than 2,000 sq. km of properties in Argentina, including Antofalla, Don Bosco, Caballos, Mogote, Pescado and Potrerillos. In July 2016, it signed an option agreement for the Antofalla silver-gold-base metal property in Catamarca province. It says Antofalla has geological similarities to Chinchillas.
It also has two Chilean projects in proximity: the Indiana gold-copper project and the Atlantida copper-gold project. Indiana is 40 km north of the city of Copiapo, 1,470 metres above sea level, and has an inferred resource of 3.1 million tonnes at 2.8 grams gold per tonne and 1.6% copper. Atlantida is 60 km northeast of Copiapo at 1,700 metres above sea level, and has a historical resource of 427 million tonnes at 0.20% copper and 0.34 gram gold, based on a drill database of 29,000 metres.
In March 2019, Golden Arrow raised $4.7 million in a private placement at 30¢ per unit that will help working capital.
Gran Colombia Gold
Toronto-based, mid-tier gold miner Gran Colombia Gold (TSX: GCM) is Colombia’s largest underground gold and silver producer, with several mines operating at its Segovia and Marmato operations.
Gran Colombia says it is “continuing to focus on exploration, expansion and modernization activities at its high-grade Segovia operations.”
The processing plant at Gran Colombia Gold’s Segovia gold mine in Antioquia, Colombia. Credit: Gran Colombia Gold.
The company produced 218,000 oz. gold in 2018, up 25% over 2017, and entered 2019 on strong note, with record quarterly gold production of 60,601 oz. gold leading to new highs for revenue and adjusted earnings before interest, taxes, depreciation and amortization.
Gran Colombia’s cash position at the end of March 2019 was US$40.2 million, up US$4.6 million since the end of 2018, and it continued to pay down its Gold Notes, which have a US$78.5-million aggregate principal amount outstanding.
Gran Colombia executive chairman Serafino Iacono said in a release that the firm’s technical studies at the Marmato project “are gaining momentum, and we remain on track to complete a preliminary economic assessment later this year. With another 20,472 oz. gold produced in April, our second quarter is picking up right where we left off in March.”
Vancouver-based Leagold Mining (TSX: LMC) owns the Los Filos mine complex in Mexico, and the RDM, Fazenda and Pilar mines in Brazil, with consolidated production in 2018 reaching 302,550 oz. gold at all-in sustaining costs of US$974 per oz. gold.
This year, Leagold forecasts production of between 380,000 and 420,000 oz. gold at AISCs of between US$920 and US$970 per oz. gold.
Breaking down its 2019 guidance, the Los Filos mine complex — which has two open-pit mines (Los Filos and Bermejal), and an underground mine (Los Filos) — could produce 200,000 to 220,000 oz. gold.
RDM, an open-pit mine, is expected to produce between 72,000 and 80,000 oz. gold; Fazenda, an underground mine, between 63,000 and 70,000 oz. gold; and the Pilar mine, a complex of underground mines, 45,000 to 50,000 oz. gold.
Leagold acquired the Los Filos complex, 180 km south of Mexico City, in 2017, and its three Brazilian mines in May 2018.
RDM is 560 km north of the state capital of Belo Horizonte in Minas Gerais state. Fazenda is in Bahia state, 180 km northwest of the state capital of Salvador, and Pilar, in Goias state, is 320 km from Brasilia.
Leagold completed a feasibility study on expanding the Los Filos mine in March 2019, and outlined the potential to increase gold production to more than 400,000 oz. gold a year. Expansion opportunities include developing the Bermejal underground mine, expanding the Los Filos open-pit mine, rephasing the Bermejal open pit into two sections (Bermejal and Guadalupe), and building a 4,000-tonne-per-day, carbon-in-leach plant.
In May 2019, Leagold got a commitment from a syndicate of lenders for a US$200-million term loan and a US$200-million revolving credit facility. The loans will help repay debt and finance growth through the phased expansion of the Los Filos mine and construction of the Santa Luz project, without having to tap the equity markets.
Brazil-focused junior Meridian Mining (TSXV: MNO) is producing manganese at its Espigao do Oeste project site in the state of Rondonia in northwestern Brazil.
The company got a trial production licence in September 2018 that allows the extraction of 6,000 tonnes of manganese oxide concentrate per year from its exploration licences.
Manganese oxides are hosted in colluvial and saprolite horizons. The mineralization is freely dug, pre-concentrated at the site and processed using gravity separation. No drilling, blasting or chemical beneficiation is required.
Three hundred kilometres north of Espigao do Oeste, Meridian is evaluating prospects for processing tin from tailings at the Bom Futuro mine in the Ariquemes tin district.
Mineralization was discovered at Bom Futuro in 1987, and since then mining operations have generated 192,000 tonnes of tin. Meridian is evaluating tailings reprocessing scenarios in allocated areas. The company has access to more than 8.8 sq. km of tailings for re-processing.
The company notes that over the last few years, local cooperatives have reprocessed tailings associated with historic production, and have generated nearly 7,000 tonnes of since 2010.
In January 2019, Meridian increased a loan facility from Sentient Global Resources Funds IV from US$1.5 million to US$3 million. The loan bears a 10% interest rate and matures on March 31, 2020.
New Energy Metals
From its base in Vancouver, New Energy Metals (TSXV: ENRG) is focused on exploring and developing energy metals in Chile. Its assets include the Cristal copper project in northern Chile’s Atacama region and several prospective cobalt projects in the country’s past-producing San Juan cobalt district.
The Cristal copper project, located near the port city of Arica, next to the Peruvian border, has not seen exploration since BHP Billiton saw the property under an option agreement in 2012.
Before that, various companies explored the area during the 1990s.
Now Energy Metals wants to follow up on initial exploration work that included airborne magnetics, gravity EM studies and limited drilling, and focus on an area where a large geophysical anomaly several kilometres wide was identified. It plans to drill four to six holes to test the principal target in a US$1 million to US$1.5 million drill program. The company says the anomaly measures several kilometres across, and shows a weak magnetic high surrounded by a magnetic low, which could indicate a buried copper porphyry system.
In February 2019, the company announced a private placement of up to 6.7 million units at 7.5¢ per unit, for proceeds of $500,000. The funds will help exploration and development.
Based in Toronto, Sierra Metals (TSX: SMT; NYSE-AM: SMTS) owns and operates three precious and base metal mines in Latin America: the 82%-owned Yauricocha mine in Peru, and the Bolivar and Cusi mines in Mexico.
Located in Lima Department, the Yauricocha mine produces silver, lead, zinc, copper and gold from a high-temperature, carbonate-replacement deposit. It’s an underground mine, with miners using sublevel caving and cut-and-fill methods, as well as ore processing in a flotation plant.
Surface facilities at Sierra Metals’ Yauricocha polymetallic mine in Yauyos province, Peru. Photo by Salma Tarikh.
In Mexico, Bolivar produces copper, silver and gold, while the smaller Cusi produces silver, lead, gold and zinc. Both are underground mines.
In 2018, on a consolidated basis, Sierra Metals produced 2.7 million oz. silver (a 17% increase from 2017), 34 million lb. copper (27% increase), 76.8 million lb. zinc (1% increase), 27.7 million lb. lead (7% decrease) and 7,743 oz. gold (25% increase). Full-year financial results are available soon.
In the first quarter of 2019, they reported revenue of US$49.2 million and adjusted earnings before interest, tax, depreciation and amortization of US$12 million on throughput of 568,401 tonnes and metal production of 4 million equivalent oz. silver, or 21.8 million equivalent lb. copper, or 50.6 million equivalent lb. zinc.
The company says its “has continued to be successful in maintaining positive operating cash-flow generation from its existing operations in order to reduce debt levels, fund required capital expenditures, and maintain liquidity.”